November 13, 2020
To, The Corporate Relations Department The Corporate Relations Department The National Stock Exchange of India Ltd. Department of Corporate Services Exchange Plaza, 5th Floor, BSE Limited Plot No. C/1, G-Block, 25th Floor, Phiroze Jeejeebhoy Towers, Bandra-Kurla Complex, Dalal Street, Mumbai – 400001 Bandra (E), Mumbai - 400051
Re: Scrip Code 960165, 958770, 959074 and 959990; Scrip Code 542602 and Scrip Symbol “EMBASSY”
Dear Sir/Madam,
Subject: Submission of Half-Yearly Report
Pursuant to Regulation 23(3) of the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014, we have enclosed the Half-Yearly Report with respect to the activities of Embassy Office Parks REIT for the period ended September 30, 2020.
The Half-Yearly report referred above is also uploaded on our website at www.ir.embassyofficeparks.com.
Kindly take the same on your record.
Thank you
Yours sincerely,
For and on behalf of Embassy Office Parks REIT acting through its Manager, Embassy Office Parks Management Services Private Limited
Deepika Srivastava Company Secretary and Compliance Officer A23654
Encl: As above
Embassy Office Parks Management Services Pvt. Ltd. Embassy GolfLinks Business Park, Pebble Beach, Off Intermediate Ring Road, Bangalore – 560 071, India. T: +91 80 4903 0000 F: +91 80 4903 0046. www.embassyofficeparks.com I CIN: U70100KA2014PTC073362
Registered Office: Embassy Point, 1st Floor, 150, Infantry Road, Bangalore – 560 001. India T: +91 80 4179 9999 I F: +91 80 2228 6912
WHERE THE WORLD COMES TO WORK
HALF-YEARLY REPORT 2020-21 Contents
CORPORATE OVERVIEW Introduction and performance review 48 C ORPORATE GOVERNANCE 2 Embassy REIT at a glance 62 STATUTORY DISCLOSURES 4 Chairman’s perspective 81 FINANCIAL STATEMENTS 6 From the CEO’s desk 82 Standalone 10 Our COVID-19 response 124 Consolidated 12 Our strategic priorities 212 SUMMARY VALUATION REPORT 14 Key performance indicators 16 Occupiers 17 Portfolio overview 18 Commercial portfolio update 19 Development update 20 Investor relations updates 22 Community
Governance and leadership 25 Governance 26 Board of Directors 29 Management team
Our portfolio 32 Commercial properties 44 Other assets Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Performance highlights: 1H FY2021
33.3 msf# 160+ Portfolio Blue-chip occupiers
91.7% 28% Occupancy Mark-to-market upside
48% 6.5 YEARS Gross rents from Weighted Average Lease Fortune 500 occupiers Expiry (WALE)
J10,564 Mn J9,383 Mn Revenue from operations Net operating income 5% *
J9,237 Mn J8,743 Mn EBITDA 8% * Distributions
100% 16% Payout ratio Net debt/Total Enterprise Value (TEV)
99.5% 99.7% 2Q FY2021 office 1Q FY2021 office rental collections rental collections
*Growth over 1H FY2020 #Millions Sq. ft.
Half-Yearly Report 2020-21 1 Embassy REIT at a glance
We are India’s first listed Real Estate Investment Trust (REIT) and the largest in Asia by area. We manage a Grade A commercial office portfolio that serves as essential corporate infrastructure to global occupiers, including many Fortune 500 corporations.
Embassy Office Parks is India’s KEY STATISTICS first publicly listed Real Estate Investment Trust (REIT). Listed in April 2019, Embassy REIT owns and operates a 33.31 million 78 11 square feet (msf) portfolio of World-class Commercial seven infrastructure-like office office buildings offices parks and four city‑centre office buildings in India’s best performing office markets of Bengaluru, Mumbai, Pune, and the National Capital Region (NCR). Embassy REIT’s 160+ 100 MW portfolio comprises 26.2 msf Blue-chip Solar park completed operating area, occupiers has an occupancy of 91.7% as of September 30, 2020, and is home to many of the world’s leading companies as occupiers. The portfolio also comprises strategic amenities, including two operational business hotels, two 1 under ‑construction hotels, and 1,096 a 100 MW solar park supplying Hotel keys renewable energy to park occupiers.
ICRA AAA (Stable) Embassy Office Parks REIT Embassy REIT is a constituent (Issuer Rating) of Benchmark Global Indices such as FTSE EPRA-NAREIT, CRISIL AAA FTSE Russell, and S&P Dow (Stable) Embassy Office Parks REIT Jones Index Series. Series I NCD (Tranche I & II) Series II NCD (Tranche A & B)
1 Includes completed, under construction and proposed future development
2 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Our portfolio
MARKET VALUE BY GEOGRAPHY MARKET VALUE BY ASSET TYPE
% 9% NCR
Commercial office:92 Other: 8 13% Pune
MARKET VALUE BY INCOME PRODUCING ASSETS 14% Mumbai
%
Bengaluru 64% Completed: 90 Under construction: 10
Investment objectives We invest in high-quality assets with the objective of maximising NAV growth and paying distributions to Unitholders. 80% 90% 49% Minimum investment by Minimum Net Distributable Upper limit on debt by value in completed and Cashflow (NDCF) payout asset value income-producing assets to Unitholders
Our sponsors
Embassy Blackstone The local expert The global manager
• Among the leading commercial real estate • A leading global investment business investing developers in India, with interests in office, capital on behalf of pension funds, large industrial, co-living, and residential sectors institutions and individuals, with a Total Assets Under Management (AUM) of US$538.0 Billion • Owns extensive landbank in India • A global leader in real estate investing • Integrated platform of project management, land acquisitions and marketing of real estate assets US$174 Billion Total AUM • Has adopted local schools and promotes health and fitness in local communities US$329 Billion 25 years+ Total enterprise value of portfolio Track record of working across land acquisitions, development and marketing of assets 575 Real estate professionals across 11 offices All data as of September 30, 2020
Half-Yearly Report 2020-21 3 Chairman’s perspective Well Positioned for the Long Term
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In these challenging times, Embassy REIT remains a reassuring benchmark for global occupiers: a world-class commercial office portfolio that delivers the highest standards of safety and security comparable to any office market globally.
In the long term, Embassy REIT is well positioned to meet the demands of global and Fortune 500 corporations which will continue to rely on India’s technology-skilled talent and the scale and infrastructure-like qualities of our portfolio.
As a result, we remain committed to delivering distributions that capture the long-term structural appeal of Grade-A Indian office to our Unitholders.
Jitendra Virwani
Half-Yearly Report 2020-21 5 From the CEO’s desk A Resilient Performance in Challenging Times
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Dear Unitholders,
As the challenging times brought by the pandemic continue across the world and here in India, we sincerely hope that you, your family and colleagues are healthy and keeping safe. Embassy REIT continues Despite challenging market conditions, to deliver amidst COVID-19 related uncertainties and amidst one of the world’s most stringent lockdowns, we are challenging conditions pleased to report a resilient performance for the first half of FY2020-21. We maintained a healthy caused by the global occupancy of 91.7%, collected a robust 99.6% of rentals for 1H FY2021 and distributed a total of pandemic. As our `8,743 Million to our Unitholders. performance in the first Our performance clearly demonstrates the strong fundamentals of our business, the strength of our half of FY2021 shows, management and on-ground teams and underpins our ongoing commitment to continue to deliver we have successfully value to our Unitholders. Additionally, we continue to maintain our conservative balance sheet, which collected our rents, was further strengthened by our recent bond raises of `150 Billion at competitive rates. Coupled with kept expenses low, and our strong liquidity position, we are well placed to finance accretive acquisitions that benefit maintained a healthy our unitholders. balance sheet. Most NAVIGATING COVID-19 This financial year began during the early stages notably, we continue of the COVID-19 pandemic for our markets in India. Our top focus remained, and continues to remain, to distribute cash flows ensuring our workplaces provide the highest standards of health and safety for our employees to our Unitholders that and occupiers and, enabling business continuity for their critical functions. All our properties across compares to the payouts India were open and operational throughout the 1H FY2021. We continue to see a gradual ramp-up of the top yield-paying in the number of occupiers who are re-populating our buildings. Over 95% of occupiers and a weekday Indian corporates. average of over 16,600 employees operated from our properties in October 2020, compared to 8,500 employees in Q1.
Half-Yearly Report 2020-21 7 We continue to keep our buildings safe and secure our initial view: that the Indian working population with international-standard health and sanitisation demographics, and the environments at home are procedures and technology-driven solutions. very different from the West. A higher proportion We also launched a pan-India online and media of young Indians in the early phases of their campaign called #OfficeAgain to engage and careers desire collaborative spaces at the office update occupiers and their employees on various to maximise their career mobility, learning and health and safety initiatives and build confidence as networking opportunities. they re-populate their workspaces. It is indeed likely that there will be more flexibility We recently received health, safety and ESG in terms of workplace with a hybrid of traditional assurance certifications from globally renowned office and home locations. We believe that this will institutions, such as the British Safety Council and ultimately play out with more flexibility in terms British Standards Institution, endorsing the quality of working hours and location but with the office and effectiveness of the wellness practices adopted as the core business hub providing better quality, by us and our efforts in controlling the spread of lower density spaces with high standards of safety COVID-19 across our pan-India office portfolio. and wellness for the best international companies. Offices will continue to serve as core amenities for RESILIENT OCCUPIER BASE the Indian STEM talent, which these companies An area where clarity shines through in this time of seek - the young demographic workforce who want uncertainty is our occupier base and their industries. to come together for the benefit of their career, Feedback from our occupiers indicates that they for product innovation, for business productivity, remain very positive about the future of their company culture and the desire to learn, which businesses in India and that they will continue to gets satisfied and enriched through colleagues and grow. Technology companies and Global Captive mentors in the best corporate workplaces. Centres (GCCs) applying technology-based solutions for their overseas businesses form This shift will work to the advantage of a portfolio the backbone of Embassy REIT’s tenant base. such as Embassy REIT and our total business Our occupiers comprise 50% pure technology and ecosystem product, with our high-quality, 43% Global Captives. Multiple indicators including large-scale integrated campus environments and public results, hiring statistics in India, industry a broad range of amenities for our occupiers and analysis, business leader commentaries and their staff. conversations, underscore the conclusion that these types of business have a very bright future MARKET OUTLOOK and continue to invest in India. This is confirmed by While we have secured leases totaling 411k sf in NASSCOM research, which projects that the Indian H1, we believe that the ‘pause, assess, accelerate’ technology industry will grow at a CAGR of 13% to in decision-making for corporate leasing will move US$350 Billion by 2025. past the assessment stage once occupiers have substantively moved back to the offices. Our view For many of those businesses, India and the is that demand will return strongly in a couple of availability of talent at scale will continue quarters given robust performances posted recently to grow in significance for global delivery by technology and tech-dependent sectors, which is strategies in our increasingly digitised and the core occupier base for India office. technology-dependent world. On the supply front, the market supply forecast for NEXT-GENERATION WORKPLACES the next 2 years has continued to decline since the After seven months of witnessing most of corporate beginning of this year – from 122 msf in January India working from home, we are seeing an 2020 to 87 msf in September 2020, implying a emerging positive consensus, which reinforces decline of 29%. Due to the continued pressures
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related to availability of labour, funding and liquidity, work with them to structure mutually beneficial we may see further shrinkage in this number by solutions. We are confident that once the pandemic the end of the year. Our assessment of the actual subsides, and it will subside eventually, and once comparable and competing supply for Embassy decision-making and leasing activity are back on REIT is even lower. track, high-quality Grade A office portfolios like ours will see greater demand and will result in significant With limited upcoming supply, already low vacancy market share gains for our properties. rates in our key markets and further de-densification plans by corporates, we expect rentals to hold firm We will also continue to pursue acquisition targets in our core markets. and opportunities, which are value-accretive and complementary to our existing portfolio in terms of The recent result announcements from many scale, quality and location. technology companies have outlined the strong pipeline of deals, significant pull forward in I am confident that our strong occupier connect, expenditure on digital transformation and robust balance sheet and prudent capital cloud migration and an uptick in hiring by these management will help us deliver on these corporates. Some corporates have indicated that focus areas. COVID-19 has essentially halved the timeline for digital transformation, bringing it forward by at Your continued encouragement and support will least five years. We also expect increased offshoring inspire us to add value and deliver attractive returns to Global Captives as well as third-party service to our Unitholders. providers, in a recessionary and geographically agnostic world – the aftershock bounce back Yours Sincerely, driving office demand as India experienced post the global financial crisis.
Longer term, we noted the detailed global research report from Cushman & Wakefield which projects 700 msf of office demand to 2030 in Asia-Pacific region (APAC) excluding China, with 60% Michael Holland being driven by India, and the methodology and conclusions of that report underscore the continuation of the growth of the India office sector over the next decade as often articulated to us by many of our occupiers. The significant skills and cost advantage that India offers, both in terms of workforce as well as real estate costs, will continue to drive global occupiers to India office.
LOOKING AHEAD Our priorities & business strategy are clear. We continue to focus on active asset management and operational excellence to navigate and support the real estate needs of our occupiers through the pandemic. We recognise the increasing importance of wellness features and flexibility options in future leasing decisions of our occupiers and continue to
Half-Yearly Report 2020-21 9 Our COVID-19 response
With businesses opening up in a phased manner across the country, Embassy REIT continued to remain committed to protect the safety and wellbeing of our tenants. Our focus remains on ensuring business continuity for all our occupiers, while providing employees a safer work ecosystem.
We formulated comprehensive strategies and complied with the regulatory directives. We put in place stringent sanitisation protocols, digitally‑powered monitoring systems and well‑defined standard operating procedures to further enhance the safety quotient at our offices.
COVID-19 Management Initiatives
Deep Cleaning of Common Building Fumigation Thermal Screening Areas
Enhanced AHU Cleaning Touchless Visitor Social Distancing Markings Management
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Our back-to-business plan
Focus area
EDUCATION AND MEDICAL PEOPLE AWARENESS
Awareness posters, On-site isolation suites Ensuring all the visitors, digital displays, standees created within each vendors and ancillary related to personal location for emergency staff provide a self- hygiene, social distancing, handling declaration on their health, precautionary measures wellbeing, if they have Hospital tie-ups in place installed across all visited any of the hotspots, for patient evacuation prominent locations or coming from any and treatment containment zones Our ancillary staff are given Expert medical advice regular training at the Occupiers’ employees being disseminated across beginning of every shift while at work, at food employee base through courts, vending machines, Training related to thermal multiple channels or during break are to check and self-declarations Providing support to our ensure social distancing are provided to security occupiers through the and Embassy Office Parks staff ambulance facilities from security will enforce if it is Training on cleaning of all locations not practised air-conditioner equipment Ambulance crews are Demarcated social and the check points like trained and prepared for distancing in the lift Key actions taken Key filters, coils, turn on and all emergency handling lobbies, food courts turn off, fresh air volume are provided to technicians Occupiers ensure they Occupiers identify don’t bring any employees which employees must Usage of Personal who feel sick or show any come to work or use a Protective Equipment symptoms of COVID-19 rotation system (PPE) with face masks, disposable masks, gowns Maintain an isolation and boots as required room within the premises during sanitisation process of occupant Face masks are provided to all Embassy REIT employees
We received the global benchmark certification from the British Safety Council for health and safety practices implemented in controlling the spread of COVID-19 across our pan-India operating office portfolio of 26.2 msf, making it one of the largest portfolios by size to qualify for the British Safety Council’s COVID-19 Assurance Assessment.
95% of our tenants and 16,600 people are working safely from our office parks (as on October 19, 2020).
Half-Yearly Report 2020-21 11 Navigating COVID-19 impact In the post-COVID-19 ‘new normal’, a significant reduction in the densities of the workplace is happening in India and other parts of the world. As the Indian economy reboots amidst a calibrated exit from lockdowns, we see commercial real estate demand shifting to a Grade-A institutional landlords like Embassy REIT
STRONG OCCUPIER PORTFOLIO SOUND FINANCIAL POSITION Landlord of choice with a high-quality, Since listing in April 2019, Embassy REIT difficult-to-replicate office portfolio has set a high benchmark for the listed in gateway cities providing total commercial real estate sector in India. business ecosystem Embassy REIT achieved total returns of approximately 30%; and has distributed Diversified and high-credit quality over `2,750 Crore (~$3701 Million) to occupier base with 50% technology and Unitholders 48% Fortune 500 companies Strong liquidity position with existing cash 92% value in rent-yielding and undrawn commitments of `12.2 Billion office assets, hotels contribute as on September 30, 2020 less than 1% of pre-COVID-19 net operating income (FY2020) Rental collections for 2Q FY2021 from office occupiers remained robust at 99.5% Stable cash flows expected due to in line with robust office rental collections long-term lease structure (Weighted of 99.7% for 1Q FY2021 Average Lease Expiry of 6.5 years) and contracted rental increases, with only Successfully raised listed debentures of 6% of rents due for expiry in remainder `15 Billion at an average 6.98% quarterly of FY2021 coupon; utilised towards financing recent acquisition of Embassy Manyata and Embassy TechZone property maintenance operations, refinancing existing debt, construction development and for general corporate purposes Conservative balance sheet with low leverage of 16%, with less than 1% of total debt maturing prior to FY2022
PROACTIVE ASSET MANAGEMENT SAFETY AND GOVERNANCE Proactive management of leases with Received the British Safety Council’s focus on occupier retention and rent global benchmark certification for health collections; 5% occupiers are from sectors and safety practices implemented in significantly impacted by COVID-19 such controlling the spread of COVID-19 as hospitality, aviation, retail and so on across our pan-India office portfolio Hands-on approach, ensuring occupier Received the British Standards business continuity, employee wellness Institution’s assurance certificate on and safety our ESG processes for FY2019-20 per Global Reporting Initiative (GRI) Industry leadership will help us leverage framework rising consolidation and considerable supply shrinkage in commercial office space Disciplined approach in reducing cost and discretionary capital expenditure
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Our strategic priorities
We remain committed to our key business strategy of delivering total returns through regular quarterly distributions, supplemented by our organic and inorganic growth initiatives. The key focus areas of our strategy comprise: maintaining high occupancy levels; maximising net operating income; growing our existing campuses; and prudently managing our capital.
LEASING ON-CAMPUS ACQUISITIONS CAPITAL DEVELOPMENT MANAGEMENT
Leverage record Deliver ongoing Pursue inorganic Build leverage absorption and campus development opportunities selectively market momentum ahead of schedule (3rd Party Right of for India’s commercial First Offer (ROFO)) Quarterly distribution office space Accelerate new with minimum 90% development after Undertake value- of Net Distributable Manage lease careful evaluation of accretive acquisitions Cashflow (NDCF) to expiries to achieve anticipated demand be distributed Mark to Continue to seek Market (MTM) Continue with opportunities, which Maintain prudent momentum ongoing 2.7 msf are strategic and leverage levels at early stage of value accretive Deepen dialogue, the development Focus on cash focus on occupier projects, monitor Monitor volatile optimisation retention capex financing financing closely Continue to pay Proactive lease Analyse market distributions renewals and rent dynamics prior to collection committing any additional Deliver 3.4 msf rental development escalation, and build leasing pipeline
Pre COVID-19 Post COVID-19
Half-Yearly Report 2020-21 13 Key performance indicators
Financial Highlights `8,743 Mn 100% Distributions Payout ratio
Revenue from operations Net Operating Income EBITDA (I in Million) (I in Million) (I in Million)
10,564 9,383 9,237 10,557 8,912 8,563
5% 8% GROWTH GROWTH
1H FY20 1H FY21 1H FY20 1H FY21 1H FY20 1H FY21
Revenue contribution by Segment Contribution by segment & Geography Revenue from operations(1) 8 Others
1H Asset Segment City FY2021 % of Total (` Million) Embassy Manyata Commercial Office Bengaluru 5,153 49 (%) Express Towers Commercial Office Mumbai 716 7 Embassy Oxygen Commercial Office Noida 716 7 Embassy TechZone Commercial Office Pune 652 6 92 Embassy Quadron Commercial Office Pune 548 5 Commercial office FIFC Commercial Office Mumbai 521 5 Embassy 247 Commercial Office Mumbai 591 6 Embassy Qubix Commercial Office Pune 440 4 Embassy Galaxy Commercial Office Noida 403 4 Contribution by geography Embassy One Commercial Office Bengaluru 15 0 Hilton at Embassy Others Bengaluru 32 0 NCR (Noida) GolfLinks 11 Four Seasons at Others Bengaluru 16 0 Embassy One Pune Embassy Energy Others Bengaluru 760 7 15 Revenue from 10,564 100 operations (%) Portfolio Investment(2) Mumbai Embassy GolfLinks Commercial Office Bengaluru 1,966 17 Notes: Bengaluru (1) Revenue from operations does not include contribution from GLSP 57 (2) Amount represents 100% of GLSP. Embassy REIT owns a 50% stake in GLSP
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Balance Sheet Prudent capital management Net debt to TEV (I in Million) K9,039 Mn Existing cash balance
16% K3,216 Mn Equity: J 278,401 Mn Undrawn committed facilities (%) Net debt: J 51,799 Mn 0.7% 84% Debt maturities until FY2022
K113 Bn Net asset value Available debt headroom Particulars (` Million) September 30, 2020 Gross Asset Value (GAV) 337,366 Add: Other assets 67,060 Less: Other liabilities (54,199) Less: Gross debt (60,838) Principal maturity schedule Net Asset Value (NAV) 289,388 (I in Million) Number of units 771,665,343 NAV per unit (`) 375.02 36,773
Leverage metrics
Particulars September 30, 2020 12,994 Net debt to EBITDA 2.8x 5,453 Interest coverage ratio 123 251 – excluding capitalised interest 3.5x – including capitalised interest 3.3x FY21 FY22 FY23 FY24 FY25+
Half-Yearly Report 2020-21 15 Occupiers
Our occupiers are predominantly multinational corporations and many of them are household names globally. These companies hire Indian talent for their skills and ability to deliver sophisticated solutions for global businesses. We receive 50% of our gross rents from technology occupiers, and 48% from Fortune 500 corporations.
Industry Diversification Rentals from top 10 occupiers
Financial Services Occupier name Sector % of rentals 12 Others Global Technology Technology 12 Research, & Consulting Major 11 Consulting & Cognizant Technology 9 Analytics NTT Data Technology 4 50 Retail ANSR Research & Analytics 3 10 Healthcare Cerner Healthcare 3 6 Telecom PwC Research & Analytics 3 6 Technology Google India Technology 2 5 NOKIA Telecom 2 JP Morgan Financial Services 2 Notes: Represents industry diversification percentages based on Lowe’s Retail 2 Embassy REIT’s share of gross rentals Total 42
Note: Actual legal entity names of occupiers may differ
Over 95% of our 160+ corporate occupiers continue to operate their core business functions from our properties across India.
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Portfolio overview
Portfolio summary
WALE(2) Leasable area (msf)/Keys/MW Rent (` psf/mth) GAV(3) Property occupancy Completed Development Total (yrs) (%) In-place Market MTM (%) ` mn % of total Embassy Manyata 11.8 3.1 14.8 7.3 97.0 61 91 49 156,439 46 Embassy GolfLinks(1) 2.7 - 2.7 8.3 98.6 116 148 27 27,428 8 Embassy One 0.3 - 0.3 8.4 5.5 156 147 (6) 4,532 1 Bengaluru 14.7 3.1 17.8 7.6 95.7 72 102 42 188,399 56 Sub-total Express Towers 0.5 - 0.5 3.4 90.2 266 270 1 17,722 5 Embassy 247 1.2 - 1.2 4.0 85.6 99 110 11 16,404 5 FIFC 0.4 - 0.4 3.5 77.5 297 285 (4) 13,908 4 Mumbai Sub-total 2.0 - 2.0 3.6 85.2 173 178 3 48,034 14 Embassy TechZone 2.2 3.3 5.5 5.2 90.6 49 48 (3) 21,607 6 Embassy Quadron 1.9 - 1.9 2.8 77.0 44 48 8 13,104 4 Embassy Qubix 1.5 - 1.5 4.9 97.6 40 48 21 10,153 3 Pune Sub-total 5.5 3.3 8.8 4.4 87.8 45 48 7 44,864 13 Embassy Oxygen 2.5 0.7 3.3 10.7 77.7 48 54 13 21,242 6 Embassy Galaxy 1.4 - 1.4 2.7 98.9 35 45 28 8,783 3 Noida Sub-total 3.9 0.7 4.6 8.0 85.2 43 50 18 30,025 9 Subtotal (Office) 26.2 7.1 33.3 6.5 91.7 70 89 28 311,322 92 Four Seasons at 230 - 230 - 1.4 - - - 7,545 2 Embassy One Keys Keys Hilton at Embassy 247 - 247 - 9.3 - - - 4,375 1 GolfLinks Keys Keys Hilton at Embassy - 619 619 - - - - - 4,122 1 Manyata (5 & 3 star) Keys Keys Embassy Energy 100MW - 100MW - - - - - 10,002 3 Sub-total 477 Keys/ 619 Keys 1096 26,044 8 (Infrastructure 100MW Keys/ Assets) 100MW Total 26.2 msf/ 7.1 msf/ 33.3 msf/ 337,366 100 477 Keys/ 619 Keys 1096 Keys/ 100MW 100MW
(1) Details included in the above table are for 100% stake in Embassy GolfLinks, except GAV which reflects only our 50% economic interest. (2) Weighted against Gross Rentals assuming occupier exercise their renewal options after the end of the initial commitment period. (3) Gross Asset Value (GAV) per September 2020 valuation by independent valuer. Valuation exercise undertaken semi-annually.
Half-Yearly Report 2020-21 17 Commercial portfolio update
During the first half of FY2021, we leased 325k sf completed area to 14 occupiers and renewed 410k sf space with 12 existing occupiers at 17% renewal spreads.
Notable deals signed during 1H FY2021
Occupier Property Sector Area ('000 sf) Indian Technology Major Embassy Manyata Technology 44 Mitel Embassy Manyata Telecom 44 GlobalLogic Embassy Oxygen Technology 37 ATC Tires Embassy 247 Engineering & Manufacturing 36 Rockwell Automation Embassy TechZone Engineering & Manufacturing 36 Philips Embassy Manyata Engineering & Manufacturing 27 Volkswagen Embassy TechZone Engineering & Manufacturing 23 Indegene Embassy Manyata Healthcare 16 Luxoft Embassy Quadron Technology 11 Others Various Various 50 Total 324 Note: Actual legal entity names of occupiers may differ
Market rents are 28% above in-place rents 25% of leases expire between FY2021 and FY2024 Rent (` psf/month) Area expiring (msf) 0.5 msf already backfilled/renewed at 13% re-leasing spreads 89 3.0 Average lease expires 70 ~6.4% of rents
19% 1.9 MTM +28% 1.2 1.1 1.1 MTM
In place Rents Market Rents(1) FY20 FY21 FY22 FY23 FY24
Source: (1) CBRE Research Mark-to- 5% 58% 37% 18% market opportunity Rents expiring 6.6% 4.5% 8.6% 6.2%
1.8 msf average new leases signed between 47% Average re-leasing spread between FY2017 and FY2020 FY2017 and FY2020 Area (msf) Re-leased area (msf) 2.4 61% 53% 1.9 1.8 35% 35% 1.3
17% 0.3
FY17 FY18 FY19 FY20 FY20 FY17 FY18 FY19 FY20 1H FY21 1.1 0.5 1.2 1.1 0.2
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Development update
Construction Update Ongoing development
C onstruction work continuing at pace Area Completion Asset Project (msf)/Keys Date L abor gradually ramping up at all sites, to date Embassy Manyata NXT Blocks 0.8 Delivered achieved 85% of peak capacity Embassy Oxygen Tower 2 0.6 Delivered Embassy Manyata Front Parcel - 619 June 2022 I mplemented numerous measures for health Hilton Hotels and safety of workers at site Embassy Manyata M3 Block A 1.0 December 2022 O ccupiers carrying fit-out works for 820k sf in Embassy Oxygen Tower 1 0.7 March recently delivered buildings 2023 Embassy Hudson Block 0.5 June 2022 TechZone Embassy Ganges Block 0.4 June 2022 TechZone Total 4.1
Development pipeline(1) Proposed development (msf) Area Asset Project Remarks (msf) 2.4 Embassy Manyata M3 Block 0.6 Design completed, B excavation works initiated 0.9 Embassy Manyata L4 Block 0.7 Design underway Embassy Manyata F1 Block 0.7 Design to be initiated 0.6 0.7 Embassy Blocks 2.4 Design to be 1.5 TechZone 1.4, 1.9 & initiated 0.6 0.5 1.0 1.10 0.8 Total 4.4 FY19 FY20 FY23 FY24(2) Post FY24
Embassy Manyata Embassy Oxygen Embassy Techzone
Notes: (1) Excludes 619 hotel keys across Hilton & Hilton Garden Inn at Embassy Manyata due for delivery in June 2022 (2) Includes acquisition of 0.6 msf M3 Block B located within overall Embassy Manyata upon building completion in September 2023
Half-Yearly Report 2020-21 19 Investor relations update
India’s first listed REIT, Embassy REIT strives to maintain a best‑in-class investor relations programme that focuses on the highest levels of disclosure, transparency and communications with all our stakeholders.
1H FY2021 HIGHLIGHTS 30% 6,563 Index Inclusion Total returns since Retail FTSE EPRA listing Unitholders NAREIT Global Emerging Index
S&P Global Property Index
~US$1.5 Bn 15 S&P Global REIT Index Free float Sell-side analysts cover Embassy REIT
IN PARTICULAR, WE FOCUS ON Every quarter, we deliver a consolidated set of • Engaging proactively with: our Unitholders information that includes: • Embracing quality disclosure standards Audited financial statements • Addressing Unitholders’ grievances and queries Earnings presentation swiftly and accurately Supplementary data book PROACTIVE INVESTOR RELATIONS AND Valuation report (semi-annually) MEDIA MANAGEMENT We regularly host investors and analysts for site Unitholders report (semi-annually) visits, and we actively encourage Unitholders to visit our sites to understand our portfolio and our BROADER STAKEHOLDER MANAGEMENT business proposition better. AND REVIEW We also interact extensively with our regulators We have also conducted multiple non-deal and exchanges to inform them of developments roadshows, site visits and investor conferences in the market. The reduction of trading lot sizes in since listing. In these events, we engage with September 2019, for instance, was an important institutional investors, such as global institutional collaborative exercise to ensure that liquidity fund managers, domestic mutual fund managers, life remains of paramount importance to Unitholders insurance companies, alternative investment funds, and to create a healthy trading environment and high-net-worth individuals. for REITs
EVENT HIGHLIGHTS Investor and analyst engagement calendar For retail Unitholders, we hosted our Second 1H FY2021 Annual Meeting virtually (video-conference) on August 27, 2020. Date Event May 27-28 Kotak Virtual NDR 2020 COMMITTED TO HIGHEST STANDARDS OF June 4-5 BAML India Corporate Day 2020 DISCLOSURE AND TRANSPARENCY June 9-10 MS Virtual India BEST Conference 2020 Embassy REIT adheres to the highest standards June 23 Prabhudas Lilladher Webinar of corporate disclosure and transparency. August 27 Second Annual Meeting 2020 We comply with all SEBI and exchange regulations August 31 - Sep 1 Daiwa Pan-Asia REIT Conference 2020 to ensure that we fulfil our listing and notification requirement obligations. September 8-9 CITIC CLSA Investor Forum 2020 September 15-16 BoFA Global Real Estate Conference We also place all notifications on our website to 2020 ensure that our Unitholders can easily access them. Sep 22 JPM India Investor Summit 2020 We have created a reporting package that mirrors the reporting standards of global REITs.
20 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Analyst coverage Trading snapshot Embassy REIT is covered by following Key Statistics Unit Price (`) NSE BSE brokerage houses: Unit Price Opening: April 1, 2020 351.00 350.20 y Ambit Capital y ICICI Securities Closing: September 30, 2020 360.78 361.00 y Axis Capital y J.P. Morgan 52 Week High 512.00 518.00 y Axis Securities y Kotak Institutional 52 Week Low 301.35 301.00 Equities y Bank of America Market capitalisation (E Billion) y Macquarie Research y Credit Suisse As on September 30, 2020 278.40 278.57 y Morgan Stanley y CLSA Average Daily Trading Volume (ADTV) for 1H FY2021 y Nirmal Bang Units 492,082 751,051 y Goldman Sachs ` million 176 255 y UBS Securities y IIFL Securities Source: National Stock exchange (Designated) and Bombay Stock exchange
Financial and distributions calendar FY2021 Unitholding pattern
Date Event Particulars % Holding Units August 2020 1Q FY2021 Results and Earnings Call Sponsor & Sponsor Group Payment of 1Q FY2021 Distribution Blackstone 46.61 359,649,988 November 2020 2Q FY2021 Result and Earnings Call Embassy 14.97 115,484,802 Payment of 2Q FY2021 Distribution Sub-total sponsors 61.57 475,134,790 February 2021 3Q FY2021 Results and Earnings Call Institutions Payment of 3Q FY2021 Distribution Foreign Portfolio Investors 25.90 199,844,600 April 2021 4Q FY2021 Result and Earnings Call Mutual Funds 1.73 13,313,200 Payment of 4Q FY2021 Distribution Bodies Corporates 0.63 4,844,813 Note: Above timelines and distribution are tentative and Insurance Companies 0.30 2,323,000 subject to revision NBFCs 0.08 584,400 Alternative Investment Funds 0.18 1,369,400 Rewarding Unitholders Clearing Members 0.03 215,354 Trusts 0.03 256,400 Distribution since listing (`/Unit) Sub-total Institutions 28.87 222,751,167 Non-Institutions 6.89 Residents 9.40 72,559,186 6.00 6.10 5.83 5.40 5.50 Non-Resident Indians (NRI) 0.04 290,400 NRI - Non Repatriable 0.09 688,000 Hindu Undivided Family 0.03 241,800 Sub-total non-institutions 9.56 73,779,386 Total units outstanding 100.00 771,665,343
Note: As on September 30, 2020
1Q 2Q 3Q 4Q 1Q 2Q FY20 FY20 FY20 FY20 FY21 FY21
Half-Yearly Report 2020-21 21 Community
We continued to support the first responders of the pandemic by undertaking various initiatives in the best way we could across Bengaluru, Mumbai, Pune and Noida. We have set up ‘hydration stations’ at our Business Parks, so that police personnel can have access to refreshments, toilets, sanitisers and even first aid. In addition, we have also donated Personal Protective Equipment (PPE) to security forces, so that there is no shortage of safety equipment for COVID-19 fighters.
Bengaluru Mumbai Pune Noida
Hydration 5 2 2 1 stations set up
Protective 30,650 hand 6,500 hand 6,500 hand 6,500 hand equipment sanitisers sanitisers sanitisers sanitisers
30,800 protective 25,000 protective 25,000 protective 25,000 protective masks masks masks masks
900 protective 700 PPE kits glasses
Others 150,400 energy 25,000 protective 25,000 energy 25,000 energy bars masks bars bars
Fortnightly Multivitamins to Sanitisation and sanitisation and 3,000 police fumigation of fumigation of personnel nearby police nearby police stations stations
Donated disinfectant spraying machine to the fire department of Mumbai
COVID-19 Centre NSCI were PROVISION OF DRY RATIONS Supporting frontline previously using 90 gsm laminated D uring 1H, we supported 2,500 PPE, which was difficult to wear health workers families across our adopted for more than three to four hours. On September 14, 2020 Embassy government schools to provide To help deal with the long working REIT and IndusInd Bank joined them with 5.68 Lakh meals hours and the threat of infection, hands to contribute 5,000 in total Embassy REIT and IndusInd Bank and 1,000 PPE kits and N-95 collaborated to donate 60 gsm PPE masks, respectively to doctors W e collaborated with our with an advanced SSMMS fabric, and healthcare workers at the corporate occupiers – which are light-weight, and can be COVID-19 Relief Centre NSCI Cognizant and Silicon Valley worn for longer hours and are also in Worli, Mumbai. The doctors Bank for this purpose certified by the NSCI doctors. and healthcare workers at the
22 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Education We collaborated with several NGOs, namely Colours of Life, Careworks Foundations, among others to undertake several initiatives.
Key initiatives included: C ontinuation of Sputnik, an online learning and digital engagement for students from grades 1-9
E arly Childhood programme in which 113 students out of the 145 were reached through technology-based methods with 32 receiving non-technological support
A lumni programme where students participated in four webinars on the importance of their education and coaching for those taking their SSLC exams
2 5 students received special SSLC coaching and passed their exams
4 5 students were bestowed college scholarships and 10 students received scholarships for higher studies
2 students received admission to Srishti School of Art, Design & Technology with scholarships provided by Embassy
D istribution of health kits to our government-school students
Half-Yearly Report 2020-21 23 EDUCATION INFRA: SPEARHEADING PROGRESS Despite the COVID-19 pandemic, limited labour and the lockdown, work has progressed at our school sites, with proper health and safety precautions well in place.
Government Urdu Karnataka Public School, Stonehill Government School, Hegdenagar Banaswadi Higher Primary School, Tarahunise Scope 17 classrooms, staff 12 classrooms, staff Repair of desks and room, principal’s room, room, principal’s room, benches library, computer lab, toilet blocks, hand wash multipurpose hall, toilet blocks, hand wash Rainwater harvesting, Rainwater harvesting, Fixing of plumbing and clean drinking water, RO unit, solar power electrical works solar power A common play area External and internal painting of classrooms and corridor Total budget `3.98 Crore `2.9 Crore `6 Lakh 15,050 Sq.Ft. 11,365 Sq.Ft. 46,000 Sq.Ft.
Project duration FY2020 and FY2021 FY2020 and FY2021 2.5 months (From August 1, 2020 to October 20, 2020) Funding Manyata Promoters Pvt. GolfLinks Manyata partners Ltd. Software Park Promoters Pvt. Ltd.
ANZ Embassy Embassy Work status 75% completed 80% completed 80% completed
SUSTAINABLE INFRASTRUCTURE: 32,256 kg of wet waste was collected and segregated, of which 26,987 kgs of dry waste Community health collected and segregated We partnered Sarvagna Healthcare Institute to conduct several health programmes across MoU signed with the Bettahalasuru and Bengaluru, during the year. Meenukunte Panchayats at Yellahanka in Bengaluru, where Embassy will manage an Highlights Integrated Solid Waste Processing Centre in a Over 1,200 dialysis conducted in 1H FY2020 dedicated 2-acre land, benefiting 18 villages
600 patients diagnosed with diabetes and 19,176 meal packets were distributed to hypertension received free medication, residents from the April 2, 2020 to May 4, 2020 consultations and lab services every month (funded by TAICT)
SUSTAINABLE INFRASTRUCTURE: ECOGRAM 4 women as a part of the EcoGram Shakthi We conducted this programme together with The Program made 1,686 masks that are sold on an Anonymous Indian Charitable Trust (TAICT), during e-commerce website the year. Gadenahalli, a village we have adopted recently, Highlights received holistic waste management services 1,583 households (including four residential Awareness sessions on the disposal of sanitary bulk waste generators) and eight institutional waste was conducted bulk waste generators (with a total footfall of 2,055) serviced
24 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview Governance disclosures statements report
Governance
We act in a fair, ethical and transparent manner. For us, governance is more than just compliance. We have always scored high on corporate governance and regulatory compliance to protect the interest of our Unitholders and other key stakeholders.
STRONG REGULATORY FRAMEWORK THAT PROTECTS UNITHOLDER INTEREST
Asset Manager Debt Related Party Minimum 80% of 50% Independent Majority Unitholder Safeguards value in completed Directors, with 50% approval required if Sponsors are and income representation on all debt exceeds 25% of prohibited from producing committees asset value voting on their Minimum 90% Manager can be Debt cannot exceed related party of distributable removed with 49% of asset value transactions cash flows to be 60% approval Majority Unitholder distributed of unrelated approval required Unitholders Restrictions on for acquisition or speculative land Alignment with disposal of asset acquisition Unitholder which exceeds 10% of interests due to a REIT value distribution-linked Acquisition or sale management fees price of new asset structure cannot deviate from average valuation of two independent valuers by + / - 10% Fairness opinion from independent valuer required if related party leases exceed 20% of the underlying asset’s rentals
Half-Yearly Report 2020-21 25 Board of Directors
DR. RANJAN PAI MR. VIVEK MEHRA Independent Director Independent Director
M C M M M C M M C
Dr. Ranjan Pai holds MBBS Mr. Vivek Mehra is a He is also on the Board of Degree from MAHE, Manipal. well-respected senior Chartered Governors of Grassroot He is the Chairman of Manipal Accountant with an illustrious Trading Network for Women Education and Medical Group, professional career spanning – a SEWA venture and The the holding company of the over 40 years and experience Asthma, Bronchitis and Cancer Group. He is currently on spanning across sectors in Tax Lung Foundation of India. the Board of several Manipal and Regulatory domains of After serving on Board of The Group companies like Manipal Merger & Acquisition specialising Lawrence School, Sanawar, Hospitals, Manipal Cigna in Cross-border Investment and he is currently the Chairman of its Health Insurance Company Transaction Structuring. Fund-Raising Committee. and Manipal Global Education. He has held various leadership Mr. Mehra graduated in 1975 with He is also the Chairman of the roles till April 2017 in a Bachelor of Commerce (Hons) Manipal Academy of Higher PriceWaterhouseCoopers Private Degree from Sri Ram College Education Trust. Ltd. (PWC) as Partner/ Executive of Commerce, Delhi University. Director. He was the founder He has been a fellow member and national leader for PwC of the Institute of Chartered Regulatory and M&A Practices Accountants of India since 1979 and has been elected on PwC and has also given his valuable Governance Oversight Board for contribution as a member of the two consecutive terms. Federation of Indian Chambers of Commerce and Industry (FICCI) Mr. Mehra is extending his Steering Committee and National expertise as an Independent Executive Committee. Director and esteemed Board member for some prominent Indian companies such as: • Jubilant Life Sciences Ltd. • HT Media Pvt. Ltd. • DLF Ltd. • Chambal Fertilizers and • Chemicals Ltd. • Havells India Ltd. • Hero Future Energies Pvt. Ltd. • Embassy Office Parks • Management Services Pvt. Ltd. • (Manager of Embassy Office Park REIT (listed))
26 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
MR. ANUJ PURI DR. PUNITA KUMAR SINHA MR. JITENDRA VIRWANI Independent Director Independent Director Non-executive Director Chairman M M C M C M M M M M
Mr. Anuj Puri holds a bachelor’s Dr. Punita Kumar Sinha holds a Mr. Jitendra Virwani is the degree in Commerce from bachelor’s degree in Chemical Chairman and Managing Director the University of Delhi. He is a Engineering from the Indian of Embassy Group, including fellow of the Royal Institution Institute of Technology, New Delhi, the Embassy Sponsor. He is also of Chartered Surveyors and of a master’s degree in Finance and the Founder of the Embassy the Indian Institute of Insurance a Ph.D. from the Wharton School, Sponsor. He has over 25 years Surveyors and Loss Assessors. He University of Pennsylvania, and of experience in the real estate is an associate of the Institute of a master’s degree in Business and property development Chartered Accountants of India Administration from Drexel sector. He is a fellow of the Royal and of the Chartered Insurance University. She is a member of Institution of Chartered Surveyors Institute, United Kingdom. He the CFA Institute, the Council on and a member of the Equestrian has also been given the title of Foreign Relations, and a charter Federation of India. ‘Chartered Insurance Practitioner’ member of TiE-Boston. She is a by the Chartered Insurance Chartered Financial Analyst and Institute. He is currently a has been elected to serve on the director of Jagran Prakashan Board of Governors of the CFA Limited, Music Broadcast Institute, USA. She founded Pacific Limited, ANAROCK Investments Paradigm Advisors LLC. Earlier, Advisors Private Limited, Puri she was the Chief Investment Crawford Insurance Surveyors Officer for The India Fund Inc. and and Loss Assessors India Private the Asia Tigers Fund Inc. and a Limited, ANAROCK Property portfolio manager at Oppenheimer Consultants Private Limited, Asset Management. Trespect India Private Limited, HVS Anarock Hotel Advisory Services Private Limited, Anarock Capital Advisors Private Limited, Anarock Retail Advisors Private Limited, Homexchange Limited and ANAROCK Group Business Services Private Limited.
COMMITTEE DETAILS
Audit Nomination and Stakeholders’ Corporate Social Risk Investment Remuneration Relationship Responsibility Management
Half-Yearly Report 2020-21 27 Board of Directors
MR. ADITYA VIRWANI MR. TUHIN PARIKH MR. Robert Christopher Heady Non-executive Director Non-executive Director Non-executive Director
M M M M M M M M
Mr. Aditya Virwani is Mr. Tuhin Parikh holds a Mr. Robert Christopher Heady Chief Operating Officer of bachelor’s degree in Commerce holds a bachelor’s degree from Embassy Group and is on the from Mumbai University and the University of Chicago. He has Board of several Embassy a postgraduate diploma in been with Blackstone since 2000 Group companies. He joined Management from the Indian and is currently the Chairman of the Embassy Group after Institute of Management, Asia Pacific, Head of Real Estate completing a Bachelors in Ahmedabad. He was on the Asia for Blackstone. Business Administration at the Board of TCG Urban Holdings University of San Francisco Limited from 2002 to 2007. He (USF). He oversees all of Embassy has been with Blackstone since Group’s day-to-day operations, 2007 and is currently the Senior and also liaises with key Managing Director of Blackstone stakeholders of Embassy Group’s Real Estate’s operations in India. partners across all business verticals.
COMMITTEE DETAILS Audit Nomination and Stakeholders’ Corporate Social Risk Investment Remuneration Relationship Responsibility Management
28 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Management team
1 2 3 MR. MICHAEL HOLLAND MR. VIKAASH KHDLOYA MR. ARAVIND MAIYA Chief Executive Officer Deputy Chief Executive Officer Chief Financial Officer and Chief Operating Officer
4 5 6 MR. SACHIN SHAH MR. BHHAVESH KAMDAR MR. RITWIK BHATTACHARJEE Chief Investment Officer President, Leasing Head, Investor Relations
7 8 9 MR. RAJAN M. G. MR. RAJENDRAN MR. RAGHU SAPRA Head, Operations SUBRAMANIAM Assistant Vice President, Head, Projects Hospitality
10 11 12 MR. DONNIE DOMINIC GEORGE MS. DEEPIKA SRIVASTAVA MRS. MANSI BAHL General Counsel Company Secretary and Human Resources Manager Compliance Officer
Half-Yearly Report 2020-21 29 Management team
1 3 5 Mr. Michael Holland holds a Mr. Aravind Maiya has been Mr. Bhhavesh Kamdar holds an master’s degree in Property appointed as the Chief Financial executive master’s degree in Development (Project Officer for Manager to Embassy Business Administration from Management) from South Bank REIT with effect from close S.P. Jain Institute of Management University and is a Fellow of the of business on May 19, 2020. & Research, Mumbai. He has over Royal Institution of Chartered He joined the Manager to 29 years of experience covering Surveyors. He has over 30 years Embassy REIT in May 2019 as a real estate, technology and of experience in the commercial Deputy Chief Financial Officer. engineering industry. He worked real estate sector in Asia and He holds a bachelor’s degree at Larsen & Toubro Limited Europe. in Commerce from Bangalore from 1993 to 2014, where his University and is an associate last held position was Deputy Prior to joining the Embassy member of the Institute of General Manager – Leasing and Group, he was the Chief Executive Chartered Accountants of Marketing (Commercial). He has Officer of Assetz Property Group. India. He has over 18 years been associated with the Manager He is a Founder of the Jones of experience in the field of since 2014. Lang LaSalle India business and finance, audit, consulting, risk served as its Country Manager management and compliance. 6 and Managing Director from Prior to joining Embassy REIT, Mr. Ritwik Bhattacharjee 1998 to 2002. he was associated with BSR & holds a bachelor’s degree in 2 Associates LLP between 2001 to Economics from Middlebury 2019 wherein his last held position College a master’s degree in Mr. Vikaash Khdloya holds a was Partner – Assurance and Business Administration from the bachelor’s degree in Commerce Audit Services. He specialised in Amos Tuck School of Business from Osmania University. He is real estate sector with specific Administration, Dartmouth a fellow member of the Institute focus on commercial real estate College, and a master’s degree of Chartered Accountants of related work during his long stint in Law and Diplomacy from India (Gold Medalist). He is also a with BSR. He was also involved in the Fletcher School of Law and certified fraud examiner, a certified various assignments for the firm, Diplomacy, Tufts University. He internal auditor and a CFA charter including several capital market has over 12 years of experience holder. He has over 13 years of transactions, assurance services as an investment banker. He experience in the real estate sector for multiple listed companies, was previously associated with and over 17 years of experience leading large audit and assurance Nomura Singapore Limited as an in all. Prior to joining the Manager, assignments as well as strategic Executive Director and UBS AG he was a Managing Director in the initiatives for BSR during Singapore branch as a Director in Real Estate Group at Blackstone his tenure. the investment banking division. Advisors India Private Limited and was responsible for asset 4 Prior to joining the Manager management of the commercial in 2018, he was responsible Mr. Sachin Shah holds a Bachelor office portfolio. Earlier, he worked for overseeing an internal of Science degree from the School as Vice President at Piramal Fund family office portfolio of real of Business, Babson College, Management (erstwhile IndiaREIT) estate as well as public and Massachusetts and a master’s and as the Chief Financial Officer private investments. degree in Business Administration at Gameshastra Solutions Private from the Faculty of Business Limited. He also co-founded Administration, Harvard University. Earnest People’s Initiative for a He has over 18 years of experience Caring Society Trust. in the real estate sector. He worked at the Starwood Capital Group from 2001 to 2006, where his last held position was Vice President of Acquisitions and was associated with Blackstone as an analyst from 1998 to 1999.
30 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
7 9 11 Mr. Rajan M. G. holds a Civil Mr. Raghu Sapra holds a Ms. Deepika Srivastava is a Engineering Diploma from the diploma in Hotel Management qualified Company Secretary Department of Technical Education and Catering Technology from with graduate degrees in Law and and is a member of the Royal Institute of Hotel Management, Commerce, and a postgraduate Institute of Chartered Surveyors. Mumbai. degree in Sociology. She has also He has around three decades completed an Executive General He has over 22 years of of experience in the fields of Management Program from IIM, experience in the hospitality Construction, Project Management, Bangalore. She brings over 12 sector. He has previously worked Facilities Management and years of rich experience handling at the Radisson Hotel, Delhi, The Environmental Health and Safety. statutory and compliance Imperial, New Delhi, at Hyatt Prior to joining Embassy REIT, functions for listed companies. Regency Mumbai, Hyatt Regency he was the Vice President and Delhi and Renaissance Hotel & Her previous stint was with Tata Head of Corporate Real Estate and Convention Centre Mumbai. From Consumer Products Limited Facilities at EXL. 2011 to 2017 he was employed as (formerly known as Tata Global 8 the General Manager and Director Beverages Limited) and prior of Operations at various hotels to this she was Company Mr. Rajendran Subramaniam managed by the ‘Hilton’ brand. Secretary of Mount Everest is the Head–Projects & Capex Mineral Water Limited and of the Manager. He holds a 10 Paramount Cosmetics (I) Ltd. bachelor’s degree and a master’s Mr. Donnie Dominic George In addition to that she was also degree in Commerce from is a Law Graduate (B.A. LL.B- part of compliance team at Madurai Kamaraj University. He Hons.) from Gujarat National Escorts Limited. is an associate of the Institute of Law University and has 10+ years Chartered Accountants of India. She specialises in Companies of experience and in his prior He has worked as a Manager in Act and other Securities Laws. assignment, he was working as Sandur Laminates Limited and Her expertise also extends Vice President at Lodha Group, as Regional Head-Commercial to mergers, post-merger Mumbai, where he was heading with Electrosteel Castings compliances and related areas. the Non-litigation cell. He has Limited. Prior to joining also worked with Bharucha & Embassy REIT, he was the 12 Partners as Senior Associate Senior Director-Commercial Mrs. Mansi Bahl holds a handling Mergers & Acquisitions, with Tishman Speyer India postgraduate diploma in Human Foreign Direct Investment and Private Limited for a period of Resource Management from General Corporate, Regulatory, 11 years. He has vast experience Amity Business School. She has and Banking & Finance for of ~25 years in various fields of over 12 years of experience in their clients. In his current Infrastructure and Commercial HR Operations, Learning and role at Embassy Office Parks real estate projects development, Development, Talent Acquisition Management Services Pvt. including that of mixed use real and Performance Management Ltd., he is supporting the estate developments. System. Prior to joining Embassy senior management on legal, Office Parks, she has worked with compliance and regulatory KCT Bros (Coal Sales) Ltd. and framework and acts as a business DLF in the real estate industry. legal partner.
Half-Yearly Report 2020-21 31 Commercial properties Embassy Manyata, Bengaluru
Embassy Manyata is the largest operational office park in Bengaluru. It is located in North Bengaluru, a prominent growth corridor, which connects the international airport to the city centre.
KEY STATISTICS 2006 97% Year of commencement Occupancy
121.76 acres K156,439 Mn Site area Market value
14.8 msf 3.1 Mn Leasable area Development area
11.8 msf 41 Completed area Occupiers
OCCUPIER MIX
4.4 8.2 Technology 4.7 44.3 Retail 6.4 Telecom (%) Healthcare 9.6 Financial services Engineering & Manufacturing 11.1 Research, Consulting & Analytics 11.2 Others
All data as of September 30, 2020
32 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Half-Yearly Report 2020-21 33 Embassy GolfLinks, Bengaluru
Located in the heart of Bengaluru, Embassy GolfLinks is one of India’s most recognised and awarded business parks.
KEY STATISTICS 2004 Year of commencement
37.11 acres Site area
2.7 msf Leasable area
OCCUPIER MIX K27,428 Mn Market value 4.8 14.9 Technology 98.6% Retail Healthcare Occupancy 17.2 (%) Financial services 2.0 Research, Consulting & Analytics 18 0.5 60.6 Others Occupiers
All data as of September 30, 2020
34 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Embassy One, Bengaluru
Embassy One is strategically located on the main road entering Bengaluru CBD from the international airport. It provides premium small format office space to corporate occupiers with the added benefit of being part of a mixed use project that also comprises a luxury Four Seasons hotel, as well as retail spaces.
KEY STATISTICS
2017 0.3 msf 5.5% 55K sf Year of Leasable area Occupancy Retail area commencement
3.19 acres K4,532 Mn 2 Site area Market value Occupiers
Half-Yearly Report 2020-21 35 Express Towers, Mumbai
Express Towers, located in Nariman Point (Mumbai’s CBD), enjoys a prominent location in close proximity to some of India’s most exclusive residential neighbourhoods and state infrastructure, such as the State Legislative Assembly and the State High Court.
KEY STATISTICS 1970 Year of commencement
1.46 acres Site area
0.5 msf Leasable area OCCUPIER MIX K17,722 Mn 1.1 1.6 Retail Market value 17.6 Telecom Financial services 90.2% Engineering & Manufacturing (%) Occupancy 46.5 Research, Consulting & Analytics Others 27 29.8 3.5 Occupiers
All data as of September 30, 2020
36 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
First International Finance Centre (FIFC), Mumbai
FIFC is one of our premium office buildings and is located in the Bandra-Kurla Complex (BKC), arguably the financial centre of India’s commercial capital.
KEY STATISTICS 2012 Year of commencement
1.99 acres Site area
0.4 msf Leasable area OCCUPIER MIX K13,908 Mn 18.8 Technology Market value Retail 1.9 Research, Consulting & Analytics Others 77.5% 5.8 (%) Occupancy
73.5 6 Occupiers
All data as of September 30, 2020
Half-Yearly Report 2020-21 37 Embassy 247, Mumbai
Embassy 247 is well located at Vikhroli on an arterial road (LBS Marg) between Mumbai’s two major freeways–The Eastern Express Highway and The Western Express Highway.
KEY STATISTICS 2009 Year of commencement
7.27 acres Site area
1.2 msf Leasable area OCCUPIER MIX K16,404 Mn 19.5 Market value 29.1 Technology Retail Telecom 85.6% (%) 13.5 Financial services Occupancy Engineering & Manufacturing 9.2 3.3 Others
21 25.4 Occupiers
All data as of September 30, 2020
38 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Embassy Qubix, Pune
Embassy Qubix is located in the submarket of West Pune, which offers excellent social and lifestyle infrastructure, various transportation links to both Mumbai and Pune Central Business District (CBD) and a large residential catchment catering to the growing technology workforce.
KEY STATISTICS 2011 Year of commencement
25.16 acres Site area
1.5 msf Leasable area OCCUPIER MIX 8.4 K Mn 2.5 10,153 1.3 Technology Market value Retail Engineering & Manufacturing (%) Research, Consulting & Analytics 97.6% Occupancy
87.8 26 Occupiers
All data as of September 30, 2020
Half-Yearly Report 2020-21 39 Embassy Quadron, Pune
Embassy Quadron is a large hub of technology companies and among the most popular office locations in Pune. It is located in the West Pune submarket, which offers good transportation links to Mumbai and Central Pune and houses a large residential catchment.
KEY STATISTICS 2008 Year of commencement
25.52 acres Site area
1.9 msf Leasable area OCCUPIER MIX
K13,104 Mn 0.3 Market value 14.7 Technology Retail Financial services 77.0% (%) Research, Consulting & Analytics Occupancy 22.6 Others
60.5 6 1.9 Occupiers
All data as of September 30, 2020
40 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Embassy Techzone, Pune
Located near the Mumbai-Pune Expressway, Embassy Techzone is a premium business park in its submarket, spread across a total area of 67.4 5 a cres .
KEY STATISTICS 2008 Year of commencement
67.45 acres Site area
5.5 msf Leasable area
K21,607 Mn Market value
2.2 msf Completed area OCCUPIER MIX 0.4 msf 2.9 3.3 16.3 Technology Development area Retail 3.5 Healthcare 0.4 (%) Engineering & Manufacturing 90.6% Research, Consulting & Analytics Occupancy Others 76.5 17 Occupiers
All data as of September 30, 2020
Half-Yearly Report 2020-21 41 Commercial properties Embassy Galaxy, Noida
Embassy Galaxy is located in the peripheral Noida submarket, which is a well-known technology hub due to its affordable rents, established connectivity an social infrastructure.
KEY STATISTICS 2007 Year of commencement
9.88 acres Site area
1.4 msf Leasable area OCCUPIER MIX
K8,783 Mn 0.5 14.6 Market value Technology 0.3 Retail 0.4 2.4 Telecom 98.9% (%) Healthcare Occupancy Financial services Others 7 81.7 Occupiers
All data as of September 30, 2020
42 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Embassy Oxygen, Noida
Embassy Oxygen is located close to the Noida-Greater Noida Expressway, a major-six lane highway connecting Noida with Greater Noida.
KEY STATISTICS 2011 Year of commencement
24.83 acres Site area
3.3 msf Leasable area
K21,242 Mn Market value
2.5 msf Completed area OCCUPIER MIX
0.2 0.7 msf 20.7 Technology Development area Retail Healthcare 77.7% (%) Research, Consulting & Analytics Occupancy Others 29.1 49.6 7 0.4 Occupiers
All data as of September 30, 2020
Half-Yearly Report 2020-21 43 Other assets Hilton Embassy GolfLinks, Bengaluru
Overlooking the expansive Karnataka Golf Course, Hilton Bengaluru Embassy GolfLinks is a 247-key hotel set within the premises of Embassy GolfLinks.
KEY STATISTICS 2014 Year of commencement
3.59 acres Site area 5-Star Hotel category 247 Number of hotel keys 9.3% Occupancy
K4,375 Mn Market value
44 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Four Seasons Bengaluru at Embassy One
The Four Seasons at Embassy One was launched in May 2019. It is the only luxury hotel situated on the Airport corridor, and is highly complementary to the small-format high-end office premises within the same complex.
KEY STATISTICS 2019 Year of commencement
5-Star LUXURY Hotel category
K7,545 Mn Market value 1.4% Occupancy 230 Number of hotel keys
Half-Yearly Report 2020-21 45 Other assets Hilton Hotels Embassy Manyata, Bengaluru
The Hilton & Hilton Garden Inn at Embassy Manyata will be a 619-key dual hotel set within the overall campus of Embassy Manyata. The complex will include over 100k sf of retail and Convention Centre, including flexible meeting space, a pillarless ballroom of 14,000 sf and outdoor event space of 6,600 sf.
KEY STATISTICS Hilton 5-Star Hotel category 266 Number of hotel keys K4,122 Mn Market value
Hilton Garden Inn 3-Star Hotel category 353 Number of hotel keys K4,122 Mn Market value Under construction Status June 2022 Expected completion Over 100k sf Retail and Convention Centre
46 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Embassy Energy
Embassy Energy is our solar park (capacity of 100 MW), a source of green energy to our properties in Bengaluru. The plant has a capacity of 215 Million units per annum and offsets up to 200 Million kg
of CO2 annually.
KEY STATISTICS 2018 Year of commencement
460 acres Site area
100 MW Capacity
K10,002 Mn Market value
215 Mn Annual capacity
Half-Yearly Report 2020-21 47 GOVERNANCE Embassy REIT’s Philosophy on Corporate Governance Report on corporate governance
Embassy REIT seeks to ensure a high standard of The Trustee is not an Associate of either of the Sponsors corporate governance consistent with global best or the Manager. The Trustee is responsible for safe practices. Our governance framework emphasises custody of the assets of the Embassy REIT and holds accountability, transparency and integrity, with a view the assets in trust for the benefit of the Unitholders. to maximising Unitholder value. Embassy REIT has in place a comprehensive set of compliance policies to Governance statement implement this corporate governance framework. For the six-months ended September 30, 2020, the Manager and Embassy REIT have complied with the AUTHORISATION STRUCTURE provisions of the Trust Deed, the REIT Regulations and Embassy REIT was settled on March 30, 2017 at the Corporate Governance policies. Bengaluru, Karnataka, India as an irrevocable trust under the provisions of the Indian Trusts Act, 1882, BOARD OF DIRECTORS AND MANAGEMENT pursuant to a trust deed dated March 30, 2017 as CONSTITUTION OF THE BOARD amended on September 11, 2018. Embassy REIT i. The Manager has 8 (eight) Directors. All the was registered with SEBI on August 3, 2017 as a Directors of the Manager are Non-Executive real estate investment trust under Regulation 3(1) Directors, one half of which are Independent of the Securities and Exchange Board of India Directors. The profiles of the Directors are set (Real Estate Investment Trusts) Regulations, 2014 forth on pages 26-28 of this report. (“REIT Regulations”) having registration number IN/ REIT/17-18/0001. Embassy Sponsor and Blackstone ii. The Board is responsible for the overall Sponsor are the sponsors of Embassy REIT. Units of management and governance of the Manager. Embassy REIT were listed on National Stock Exchange of India Limited (“NSE”) and BSE Limited (“BSE”) on iii. Mr. Michael D Holland (as the Chief Executive April 1, 2019. Officer of the Manager) is responsible for the day- to-day business, operations and the management MANAGER of the Manager and Embassy REIT, subject to the Embassy Office Parks Management Services Private superintendence, control and direction of the Limited (“EOPMSPL”) is the Manager of Embassy REIT. Board of Directors of the Manager. The Manager is a private limited company incorporated in India under the Companies Act, 1956 on January Meetings of the board of directors 31, 2014 at Bengaluru, Karnataka. EOPMSPL is held by i. Three Board Meetings were held during the six Embassy Sponsor and certain entities forming part of months ended September 30, 2020 i.e. on May the Blackstone Sponsor Group with the shareholding 19, 2020, August 06, 2020 and August 14, 2020 of 51% and 49%, respectively. The Manager’s role is to respectively. The necessary quorum was present manage Embassy REIT and its assets in accordance through Audio-Visual Electronic Communication with the Trust Deed, the Investment Management Means for all the meetings. Agreement and the REIT Regulations in the interests of Unitholders. ii. The Board passed two circular resolutions during the six months ended September 30, 2020 i.e. TRUSTEE on July 15, 2020 and July 31, 2020 covering Axis Trustee Services Limited is the Trustee of Embassy matters which were subsequently noted by the REIT. The Trustee is a registered intermediary with Board in their meeting held on August 06, 2020 SEBI under the Securities and Exchange Board of India and approved at the second annual meeting (Debenture Trustees) Regulations, 1993, as a debenture of the Unitholders of Embassy REIT held on trustee with registration number IND000000494 August 27, 2020. which is valid until suspended or cancelled by SEBI. The Trustee is a wholly owned subsidiary of Axis Bank Limited.
48 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
The table below sets out the number of Board and Unitholder meetings attended by each director:
Number of Board Meetings Whether attended the attended during the six meeting of the Name of the Director Category months ended Unitholders held on September 30, 2020 August 27, 2020 Mr. Jitendra Virwani Non-Independent 3 Yes Non-Executive Mr. Anuj Puri Independent Director 3 Yes Non-Executive Director Mr. Vivek Mehra Independent Director 3 Yes Non-Executive Director Mr. Aditya Virwani Non-Independent 3 Yes Non-Executive Mr. Tuhin Parikh Non-Independent 2 Yes Non-Executive Dr. Ranjan Pai Independent Director 3 Yes Non-Executive Director Dr. Punita Kumar Sinha Independent Director 3 Yes Non-Executive Director Mr. Robert Christopher Heady Non-Independent 2 Yes Non-Executive Mr. Asheesh Mohta* Non-Independent - No Non-Executive *Alternate director to Mr. Robert Christopher Heady i. Due to the Covid-19 pandemic and the subsequent lockdown in the entire country, Embassy REIT held all its Board, Committee and Unitholder meetings through Audio-Visual Electronic Communication Means. ii. On June 09, 2020, a meeting of the Independent Directors of the Manager was held to review and evaluate the performance of the directors and the Board as a whole. iii. As on September 30, 2020, the following members of the Board, Key Personnel and senior management held units in the Embassy REIT:
Name Category Number of Embassy REIT Units held Mr. Vivek Mehra Independent Director 6,400 Mr. Aditya Virwani Non-Executive Director 5,200 Mr. Michael D Holland Chief Executive Officer 265,200 Mr. Bhhavesh Kamdar, along with his President Leasing 41,000 immediate relative
* Mr. Karan Virwani holds 2,000 Units. He is related to Mr. Aditya Virwani and Mr. Jitendra Virwani, both of whom are Non-Executive Directors.
Committees constituted by the board The Board has constituted Eight (8) committees. The composition and terms of reference of each of those committees is set forth below:
Committee Composition Audit Committee Name Category Mr. Vivek Mehra – Chair Independent Non-Executive Director Mr. Anuj Puri Independent Non-Executive Director Dr. Punita Kumar Sinha Independent Non-Executive Director Dr. Ranjan Pai Independent Non-Executive Director Mr. Jitendra Virwani Non-Independent Non-Executive Director Mr. Robert Christopher Heady* Non-Independent Non-Executive Director * Mr. Asheesh Mohta, Alternate to Mr. Robert Christopher Heady
Half-Yearly Report 2020-21 49 GOVERNANCE (CONTD.) Embassy REIT’s Philosophy on Corporate Governance
The Board has constituted Eight (8) committees. The composition and terms of reference of each of those committees is set forth below:
Committee Composition Nomination and Remuneration Committee Name Category Dr. Ranjan Pai – Chair Independent Non-Executive Director Mr. Jitendra Virwani Non-Independent Non-Executive Director Mr. Tuhin Parikh Non-Independent Non-Executive Director Mr. Vivek Mehra Independent Non-Executive Director
Stakeholders’ Relationship Committee Name Category Dr. Punita Kumar Sinha – Chair Independent Non-Executive Director Mr. Aditya Virwani Non-Independent Non-Executive Director Mr. Robert Christopher Heady* Non-Independent Non-Executive Director Mr. Vivek Mehra Independent Non-Executive Director * Mr. Asheesh Mohta, Alternate to Mr. Robert Christopher Heady
Corporate Social Responsibility Committee Name Category Mr. Tuhin Parikh Non-Independent Non-Executive Director Mr. Aditya Virwani Non-Independent Non-Executive Director Dr. Ranjan Pai Independent Non-Executive Director
Risk Management Committee Name Category Mr. Vivek Mehra - Chair Independent Non-Executive Director Dr. Ranjan Pai Independent Non-Executive Director Dr. Punita Kumar Sinha Independent Non-Executive Director Mr. Anuj Puri Independent Non-Executive Director Mr. Jitendra Virwani Non-Independent Non-Executive Director Mr. Robert Christopher Heady* Non-Independent Non-Executive Director * Mr. Asheesh Mohta, Alternate to Mr. Robert Christopher Heady
Investment Committee Name Category Mr. Anuj Puri – Chair Independent Non-Executive Director Dr. Ranjan Pai Independent Non-Executive Director Mr. Jitendra Virwani Non-Independent Non-Executive Director Mr. Tuhin Parikh Non-Independent Non-Executive Director
Management Committee Name Category Mr. Michael D Holland Chief Executive Officer Mr. Vikaash Khdloya Deputy Chief Executive Officer and COO Mr. Aravind Maiya Chief Financial officer w.e.f August 06,2020 Mr. Rajesh Kaimal till August 06, 2020
Debenture Committee Name Category Mr. Tuhin Parikh Non-Independent Non-Executive Director Mr. Aditya Virwani Non-Independent Non-Executive Director Mr. Vikaash Khdloya Deputy Chief Executive Officer and COO Mr. Rajesh Kaimal Chief Financial Officer till August 06, 2020. Mr. Aravind Maiya w.e.f. August 06 2020
50 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Audit Committee - Terms of Reference and making appropriate recommendations to the The terms of reference of the Audit Committee include Board of Directors for follow-up action; the following: (ix) Approving or any subsequent modifications of (i) Providing recommendations to the Board of transactions of the Embassy REIT with related Directors regarding any proposed distributions; parties;
(ii) Overseeing the Embassy REIT’s financial reporting (x) R eviewing loans and investments of the Embassy process and disclosure of its financial information REIT; to ensure that its financial statements are correct, sufficient and credible; (xi) Reviewing valuation reports required to be prepared under applicable law, periodically, and (iii) Giving recommendations to the Board of Directors as required, under applicable law; regarding appointment, re-appointment and replacement, remuneration and terms of (x i i ) Evaluating financial controls and risk management appointment of the statutory auditor of the systems of the Embassy REIT; Embassy REIT and the audit fee, subject to the approval of the Unitholders; (xiii) Reviewing, with the management, the performance of statutory auditors of the Embassy (iv) Reviewing and monitoring the independence REIT, and adequacy of the internal control and performance of the statutory auditor of the systems, as necessary; Embassy REIT, and effectiveness of audit process; (xiv) Reviewing the adequacy of internal audit function (v) Approving payments to statutory auditors of the if any of the Embassy REIT including the structure Embassy REIT for any other services rendered by of the internal audit department, staffing and such statutory auditors; seniority of the official heading the department, reporting structure coverage and frequency of (vi) Reviewing the annual financial statements and internal audit; auditor’s report thereon of the Embassy REIT, before submission to the Board of Directors for (xv) Reviewing the findings of any internal approval, with particular reference to: investigations in relation to Embassy REIT into matters where there is suspected fraud or • changes, if any, in accounting policies and irregularity or a failure of internal control systems practices and reasons for such change; of a material nature and reporting the matter to the Board of Directors; • major accounting entries involving estimates based on the exercise of judgment by (xvi) Reviewing the procedures put in place by the management; Manager for managing any conflict that may • significant adjustments made in the financial arise between the interests of the Unitholders, the statements arising out of audit findings; parties to the Embassy REIT and the interests of the Manager, including related party transactions, • compliance with listing and other legal the indemnification of expenses or liabilities requirements relating to financial statements; incurred by the Manager, and the setting of fees • disclosure of any related party transactions; or charges payable out of the Embassy REIT’s and assets; • qualifications in the draft audit report; (xvii) Discussing with statutory auditors and valuers prior to commencement of the audit or valuation, (vii) Reviewing, with the management, all periodic respectively, about the nature and scope, as well financial statements, including but not limited as post-audit/ valuation discussion to ascertain to quarterly, half-yearly and annual financial any area of concern; statements of the Embassy REIT before submission to the Board of Directors for approval; (xviii) Reviewing and monitoring the independence and performance of the valuer of the Embassy REIT; (viii) Reviewing, with the management, the statement of uses/application of funds raised through an (xix) Monitoring the end use of net proceeds; issue of units by Embassy REIT (public issue, rights issue, preferential issue, etc.) and the (xx) Giving recommendations to the Board of Directors statement of funds utilised for purposes other regarding appointment, re-appointment and than those stated in the offer documents/ notice,
Half-Yearly Report 2020-21 51 GOVERNANCE (CONTD.) Embassy REIT’s Philosophy on Corporate Governance
replacement, remuneration and terms of 7. Ensuring that the level and composition of appointment of the valuer of the Embassy REIT; remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality (xxi) Evaluating any defaults or delay in payment of required to run the Manager successfully; distributions to the Unitholders or dividends by the Asset SPVs to the Embassy REIT and 8. Endeavour to appoint key employees to replace any payments to any creditors of the Embassy REIT key employee within six months and recommend or the Asset SPVs, and recommending remedial to the board of directors of the Manager; measures; 9. Carrying out any other function as prescribed (xxii) Reviewing the management’s discussion and under applicable law or as determined by the analysis of financial condition and results of Nomination and Remuneration Committee in the operations; interest of the employees;
(xxiii) Reviewing the statement of all related party 10. Overseeing the administration and execution of transactions, submitted by the management; any employee incentive scheme adopted in relation to the employees of the Company including the (xxiv) Reviewing the Management letters/ letters of Employee Incentive Plan 2020 (“Plan 2020”), internal control weaknesses issued by the statutory including matters relating to the settlement and auditors of the Embassy REIT; administration of any employee welfare trusts. The role of the committee shall, inter alia, include (xxv) Formulating any policy for the Manager, as determining the following: necessary, in relation to its functions, as specified above; and . a the eligibility criteria for employees eligible for incentives under the Plan 2020; (xxvi) Performing such other activities as may be delegated by the Board of Directors of the . b the terms and conditions of the awards Manager and/or are statutorily prescribed granted under the Plan 2020, including the under any law to be attended to by the Deferred Unit awards and Performance Unit Audit Committee. awards, including the criteria and performance parameters for the granting and vesting of Nomination and Remuneration Committee - Terms such awards to eligible employees; of Reference The terms of reference of the Nomination and . c the number of tranches in which the awards Remuneration Committee shall include the following: are to be granted and the number of awards to be granted in each such tranche; 1. Formulation of the criteria for determining qualifications, positive attributes and . d t he quantum of awards to be granted to each independence of a director and recommend to employee under the Plan 2020; the board of directors of the Manager a policy relating to, the remuneration of the directors, key . e the timing of issuance of the letters of managerial personnel and other employees; grant, vesting letters, or amendments or modifications thereto, determining the pool 2. Formulation of criteria for evaluation of of units available for grant and the timing of performance of independent directors and the contributions to such pool; board of directors; . f the number of awards if any, reserved for 3. Devising a policy on board diversity; granting to new employees who would join the services of the Company; 4. Identifying persons who are qualified to become directors and who may be appointed in senior EOP . g s pecify the method, as applicable, which the Company shall use to value the awards; 5. their appointment and removal and evaluation of director’s performance; . h lay down the procedure for cashless exercise of awards, if any; 6. Determining whether to extend or continue the term of appointment of the independent director, . i provide for the grant, vesting and exercise on the basis of the report of performance of awards in case of eligible employees or evaluation of independent directors; awards holders who are on long leave or who
52 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
have been seconded to any other company of the Company or otherwise, with any party by the Company; including the Blackstone Sponsor Group and the Embassy Sponsor Group, legal advisors, . j the vesting and exercise period for the awards; accountants, registrar and transfer agents, depositories, custodians, trustees, bankers, . k terms on which the awards would lapse on employees and/or others for the purposes failure to Exercise within the relevant exercise of the Plan 2020 and accept modifications, period; changes and amendments to any such documents/agreements; . l specifying the time period within which an employee shall exercise the vested awards in . v f ormulation of suitable policies and systems the event of termination or resignation of such to ensure that there is no violation of any employee; applicable law;
. m the conditions under which the vested . w such other matters, not captured above, awards may lapse, in case of termination of which may be required in relation to the employment for fraud or misconduct; implementation of the Plan 2020 in accordance with applicable law and the terms set out . n the treatment of unvested awards upon events herein; including but not limited to, termination of employment or upon a director ceasing to . x formulate various sets of special terms and hold office; conditions under the Plan 2020 to apply to an employee (or his nominee or legal heir, as . o the procedure for surrender and cancellation the case may be). Each of such sets of special of awards, if required; terms and conditions under the Plan 2020 shall be restricted in their application to such . p f raming appropriate procedures and rules for employee (or his respective nominees/ legal granting, vesting and exercise of awards and heirs). The Nomination and Remuneration amending, altering, modifying or rescinding Committee may also formulate separate sets such procedures and rules from time to time; of special terms and conditions to apply to each class or category of employees (or their . q ensuring submission of information, reports, respective nominees/legal heirs) and each of etc., in connection with the Plan 2020 or the such sets of special terms and conditions shall EWT, if required, to the recognised stock be restricted in its application to such class exchange(s) at stipulated periodical intervals or category of employees (or their respective or otherwise, as the case may be; nominees/legal heirs);
. r obtaining permissions from, and making . y the Nomination and Remuneration Committee periodic reports, to regulatory authorities, as may appoint a third party to administer may be required, and ensuring compliance the Plan 2020 and support employee with applicable law; communication, on its behalf; and
. s laying down a method for satisfaction of any . z any and all the above matters in relation to any tax obligation arising in connection with the other employee incentive scheme that may be awards in compliance with applicable law; considered or adopted by the Company in the future. . t provide for any statutory, contractual, regulatory or such other matters as may aa. delegate activities pertaining to any and all of be necessary for the administration and the above matters to one or more persons as implementation of the Plan 2020 in accordance it may deem fit. with applicable law; 11. Performing such other activities as may be . u f inalise, approve and authorise executives of delegated by the board of directors of the the Company to execute various agreements, Manager and/ or are statutorily prescribed under deeds, writings, confirmations, undertakings, any law to be attended to by the Nomination and indemnities, letters or other documents, as Remuneration Committee may be necessary, under the common seal
Half-Yearly Report 2020-21 53 GOVERNANCE (CONTD.) Embassy REIT’s Philosophy on Corporate Governance
Stakeholders’ Relationship Committee - Terms (iii) Examining and determine the sufficiency of the of Reference internal process for reporting on and managing The terms of reference of the Stakeholders’ Relationship key risk areas; Committee shall include the following: (iv) Assessing and recommending to the Board the (i) Considering and resolving grievances of the acceptable levels of risk; Unitholders, including complaints related to the transfer of units, non-receipt of annual report and (v) Assisting the Board in formulating risk strategies, non-receipt of declared distributions; policies, frameworks, models and procedures in liaison with management and in the discharge (ii) Reviewing of any litigation related to Unitholders’ of its duties relating to corporate accountability grievances; and associated risk in terms of management assurance and reporting; (iii) Updating Unitholders on acquisition/ sale of assets by the Embassy REIT and any change in (vi) Reviewing the nature and level of insurance the capital structure of the Asset SPVs; coverage of the assets of the Embassy REIT;
(iv) Reporting specific material litigation related to (vii) Investigating areas of corporate risk and Unitholders’ grievances to the Board of Directors; breakdowns in internal controls;
(v) Approving report on investor grievances, if any, (viii) Reviewing the trends in the Embassy REIT’s risk to be submitted to the Trustee by the Manager; profile reports on specific risks and the status of and the risk management process;
(vi) Performing such other activities as may be (ix) Periodically reviewing the enterprise risk delegated by the Board of Directors of the management process of the Embassy REIT; Manager and/ or are statutorily prescribed under any law to be attended to by the Stakeholders’ (x) Reviewing and assessing the quality, integrity and Relationship Committee. effectiveness of the risk management systems and ensure that the risk policies and strategies Corporate Social Responsibility Committee - Terms are effectively managed; and of Reference The terms of reference of the Corporate Social (xi) Ensuring effective and timely implementation of Responsibility Committee include the following: corrective actions to address risk management deficiencies. (i) Formulating and recommending to the Board, a CSR Policy, which shall indicate the activities Investment Committee - Terms of Reference to be undertaken by the Company in areas The terms of reference of the Investment Committee or subject, specified in Schedule VII of the include the following: Companies Act, 2013 and their budgets as well as recommendation of any subsequent change/ (i) Reviewing of investment decisions with respect to modification to the CSR Policy; the underlying assets or projects of the Embassy REIT including any further investments or (ii) Instituting an implementation and monitoring divestments to ensure protection of the interest mechanism for CSR Activities and CSR Policy; of Unitholders including, investment decisions which are related party transactions; (iii) Periodically updating the Board on the progress being made in the planned CSR Activities; and (ii) Undertaking all functions in relation to protection of Unitholders’ interests and resolution of any (iv) Providing a responsibility statement in the Board’s conflicts while making an investment, including Report. reviewing agreements or transactions in this regard; Risk Management Committee - Terms of Reference The terms of reference of the Risk Management (iii) Approving any proposal in relation to acquisition Committee include the following: of assets or further issue of Units including in relation to acquisition of assets; (i) Assessing the Embassy REIT’s risk profile and key areas of risk, in particular; (iv) Formulating any policy for the Manager as necessary, in relation to its functions, as specified (ii) Recommending the adoption of risk assessment above; and and rating procedures;
54 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
(v) Performing such other activities as may be (ix) To approve any amendments to the primary/ delegated by the Board of Directors of the secondary approvers under the Delegation of Manager and/or are statutorily prescribed Authority Matrix (“DoA”) of Embassy Office Parks under any law to be attended by the Investment REIT, its holding company and special purpose Committee. vehicles and the Company from time to time, provided that any modification of the prescribed Management Committee - Terms of Reference limits under the DoA shall be approved by the The terms of reference of the Management Committee Board of Directors; and include the following: (x) To consider and approve including authorising (i) Adopting, reviewing and monitoring of various such officials of the Company for approval and policies, systems and procedures with regards to execution of undertaking(s), declaration(s), day to day operations such as human resource, guarantee(s), letters of comfort and such other information technology, data management etc.; documents to the banks/financial institutions with respect to financial assistance availed for (ii) Investing of idle funds of Embassy REIT in areas loans availed by the Special Purpose Vehicle’s and up to a limit specifically delegated by the and Holdco of Embassy Office Parks REIT up to Board of Directors; ` 2,000 Crores.”
(iii) Monitoring of Accounts Receivables, Accounts Debenture Committee - Terms of Reference Payables and other routine finance related The terms of reference of the Debenture Committee matters; include the following:
(iv) Providing status updates on various statutory (i) perform all actions and undertake all matters such as Income Tax, Goods and Service responsibilities of the REIT to be undertaken Tax, Labour Laws etc.; by the Company pursuant to the Investment Management Agreement; (v) Providing status updates on pending litigations initiated by or against the Manager (if any); (ii) approve the debt proposed to be availed by the REIT including by way of issuance and listing of (vi) Providing reviews and recommendations on all non-convertible debentures; matters presented to the Board including the following: (iii) approve the terms and execution of the transaction contemplated by, the Transaction Documents (to • Business and strategy review; which it is a party); • Long-term financial projections and cash (iv) comply with the requirements applicable to an flows; investment manager under the REIT Regulations • Capital and revenue budgets and capital and under applicable law; expenditure programmes; (v) completing all legal, statutory and procedural • Acquisitions, divestments and business formalities, including appointment of various restructuring proposals; and intermediaries, filing / registering the Information • Senior management succession planning. Memorandum with SEBI, BSE Limited or/and National Stock Exchange of India Limited, as the (vii) Opening, operating, modifying and/or closing case may be (the “Stock Exchanges”), authorising any and all bank accounts of and/or in the name affixation of common seal (if applicable), and any of the Manager and/or Embassy REIT including other forms or applications required to be filed authorising any official/s to do any and all actions with any other statutory agencies or relevant for or in connection therewith, with or without authorities in accordance with applicable law and monetary limit on such authority, from time to do all acts in relation thereto; time; (vi) approve the terms and execute the Transaction (viii) To avail, renew and enhance the Auto Loan facilities Documents (to which it is a party), and any other including bank overdraft, from time to time, up to document designated in writing as a transaction `8 Crore and authorise execution of loan and other document by the Trustee (as the case may be) agreements including hypothecation agreements and the REIT; and to create charges on the Company’s assets;
Half-Yearly Report 2020-21 55 GOVERNANCE (CONTD.) Embassy REIT’s Philosophy on Corporate Governance
(vii) to appoint a director or other authorised persons (xv) dealing with all matters up to allotment of the to, inter alia, negotiate, finalise and execute the Debentures to the debenture holders; Transaction Documents (to which it is a party); (xvi) authorising the maintenance of a register of (viii) authorising any director or directors of the debenture holders; Company or other officer or officers of the Company, including by the grant of power of (xvii) d ealing with all matters relating to the issue and attorney, to do such acts, deeds and things as listing of the Debentures as specified under REIT such authorised person in his/her/its absolute Regulations, the SEBI (Issue and Listing of Debt discretion may deem necessary or desirable in Securities) Regulations, 2008, SEBI (Debenture connection with the Issue; Trustee) Regulations, 1993 and any guidelines as may be issued by SEBI or the Reserve Bank of (ix) giving or authorising any concerned person on India (“RBI”) in this regard; behalf of the Company to give such declarations, affidavits, certificates, consents and authorities (xviii) dealing with all matters in relation to availing as may be required from time to time; of loan by the REIT as specified under REIT Regulations and under any other applicable law; (x) authorising the appointment of credit rating agencies in order to obtain a credit rating in (xix) opening and operating of bank accounts for the relation to the Debentures; Issue;
(xi) authorising any director or directors of the (xx) accepting and utilising the proceeds of the non- Company or other officer or officers of the convertible debentures issued by the REIT in the Company to participate in investor road shows and manner provided under the respective transaction prepare investor presentations for syndication of documents and the applicable law; the Debentures; (xxi) deciding the pricing and the terms of the non- (xii) approving the information memorandum convertible debentures issued by the REIT (including amending, varying or modifying the (including but not limited to creation of security same, however fundamental they may be, as may on all securities held by the REIT in its Secured be considered desirable or expedient) in relation SPVs), and all other related matters; to the Issue of Debentures; (xxii) appointing the registrar and any other (xiii) filing of the information memorandum with intermediaries and security trustee/debenture BSE Limited or/and National Stock Exchange trustee in relation to the Debentures, in accordance of India Limited, as the case may be (the “Stock with the provisions of the REIT Regulations Exchanges”) within the prescribed time period and other applicable law and entering into the and setting up an online bidding mechanism required agreements with all intermediaries and on the electronic book platform of the Stock security trustee/debenture trustee; Exchanges, in accordance with applicable law; (xxiii) to do any other act and/or deed, to negotiate (xiv) obtaining in-principle approval, seeking the and execute any document(s), application(s), listing of the Debentures on the Stock Exchanges, agreement(s), undertaking(s), deed(s), affidavits, submitting the listing application to such Stock declarations and certificates, and/or to give such Exchange and taking all actions that may be direction as it deems fit or as may be necessary or necessary in connection with obtaining such desirable with regard to issue of non-convertible listing; debentures by the REIT.
56 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Number of committee meetings held and attendance records: The table below sets out the number of committee meetings attended by each member of the committee:
Audit Nomination and Stakeholders’ Corporate Social Committee Remuneration Relationship Responsibility Name of the Committee (“AC”) Committee Committee Committee (“NRC”) (“SRC”) (“CSR”) No. of meetings held 3 3 2 1 Date of meetings May 19, 2020 April 24, 2020 May 19, 2020 May 19, 2020 August 05, 2020 May 19, 2020 August 06, 2020 August 14, 2020 July 17, 2020 No. of Meetings Attended Name of Member Vivek Mehra 3 3 2 NA Anuj Puri 3 NA NA NA Dr. Punita Kumar Sinha 3 NA 2 NA Jitendra Virwani 3 3 NA NA Dr. Ranjan Pai 3 3 NA 1 Asheesh Mohta* 1 NA 1 NA Tuhin Parikh NA 3 NA 1 Aditya Virwani NA NA 2 1 Robert Christopher Heady 1 NA 1 NA Risk Management Debenture Investment Management Name of the Committee Committee Committee Committee Committee (“RMC”) (“DC”) (“IC”) (“MC”) No. of meetings held 2 2 1 3 Date of meetings June 09, 2020 September 01, 2020 August 14, 2020 May 18, 2020 August 05,2020 September 09, 2020 June 02, 2020 August 06, 2020 No of Meetings Attended Name of Member Vivek Mehra 2 NA Anuj Puri 2 1 Dr. Punita Kumar Sinha 2 NA Jitendra Virwani 1 1 Dr. Ranjan Pai 2 1 Asheesh Mohta* 2 NA Tuhin Parikh NA 2 - Aditya Virwani NA 2 NA Robert Christopher Heady - NA
* Alternate director to Mr. Robert Christopher Heady
Remuneration of directors Remuneration to Independent Directors is paid as a combination of sitting fees for attending Board/Committee meetings and commission/performance incentive.
Upon completion of an evaluation exercise and based on the recommendation of Nomination and Remuneration Committee, the Board of Directors (excluding independent directors) may approve the performance remuneration payable to each independent director through a unanimous resolution.
The remuneration payable to the independent directors shall be within the overall limit of the fee payable to the Manager.
Half-Yearly Report 2020-21 57 GOVERNANCE (CONTD.) Embassy REIT’s Philosophy on Corporate Governance
Policies of the board of directors of the manager in relation to the Embassy REIT The Manager has adopted the following policies in relation to the Embassy REIT:
• Code of Conduct and Ethics for Directors, Senior Management and other employees (http://s2.q4cdn. com/482484005/files/doc_downloads/2019/12/Code-of-Conduct.pdf); • Code on unpublished price sensitive information and dealing in the securities of the Embassy REIT (http://s2.q4cdn.com/482484005/files/doc_downloads/2019/12/Insider-Trading-Code_Embassy-REIT. pdf); • Distribution Policy (http://s2.q4cdn.com/482484005/files/doc_downloads/2019/12/Distribution-Policy. pdf); • Policy on Determination of Materiality of Information for Periodic Disclosures (http://s2.q4cdn. com/482484005/files/doc_downloads/2019/12/Policy-for-Determining-Materiality-of-Information-for- Periodic-Disclosures.pdf); • Whistle Blower Policy (http://s2.q4cdn.com/482484005/files/doc_downloads/2019/12/Whistle- Blower-Policy.pdf); • Policy on Related Party Transactions (http://s2.q4cdn.com/482484005/files/doc_downloads/2019/12/ Policy-on-Related-Party-Transactions.pdf); • Stakeholders Grievances and Redressal Policy (http://s2.q4cdn.com/482484005/files/doc_ downloads/2019/12/Stakeholder-Grievance-and-Redressal-Policy.pdf); • Borrowing Policy; (http://s2.q4cdn.com/482484005/files/doc_downloads/2019/12/Borrowing-Policy.pdf)) • Corporate Social Responsibility Policy; (http://s2.q4cdn.com/482484005/files/doc_downloads/2019/12/Corporate-Social-Responsibility-Policy. pdf) • Policy on Appointment of auditor and valuer; (http://s2.q4cdn.com/482484005/files/doc_downloads/2019/12/Policy-on-Appointment-of-Auditor- and-Valuer.pdf) • Risk Management Policy; (http://s2.q4cdn.com/482484005/files/doc_downloads/reit_basics/05/Risk-Management-Policy.pdf) • Document Archival Policy; • Board Evaluation Policy; • Business Continuity Policy; • Anti-Money Laundering Policy and Anti-Corruption Compliance Policy; (http://s2.q4cdn.com/482484005/files/doc_downloads/2019/12/Anti-Money-Laundering-Policy-and- Anti-Corruption-Compliance-Policy.pdf) • Prevention of Sexual Harassment Policy; • Nomination and Remuneration Policy; and • Short-term Investment Policy
58 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
UNITHOLDERS The number of Unitholders of the Embassy REIT as on September 30, 2020 was 6,987. The detailed category wise break-down of the composition of the Unitholders as on September 30, 2020 is given below:
No. of units Number of units pledged or As a % of mandatorily held otherwise encumbered No. of Units Category Category of Unit holder Total Out- As a % of As a % of Held standing Units No. of units total units No. of units total units held held (A) SPONSOR(S) / MANAGER AND THEIR ASSOCIATES/ RELATED PARTIES AND SPONSOR GROUP (1) Indian 0 0.00 (a) Individuals / HUF 0 0.00 (b) Central/State Govt. 0 0.00 (c) Financial Institutions/ 0 0.00 Banks (d) Any Other Embassy 115,484,802 14.97 115,484,802 100.00 115,484,802 100.00 Property Developments Private Limited - (Body Corporate)Sponsor Sub- Total (A) (1) 115,484,802 14.97 115,484,802 100.00 115,484,802 100.00
(2) FOREIGN (a) Individuals (Non- 0 0.00 Resident Indians / Foreign Individuals) (b) Foreign government 0 0.00 (c) Institutions 0 0.00 (d) Foreign Portfolio 0 0.00 Investors (e) Any Other a. BRE/ Mauritius 84,621,955 10.97 77,431,534# 91.50 273,866,980 99.58 Investments – Sponsor (Body Corporate) b. Sponsor Group 275,028,033 35.64 (Bodies Corporate) Sub- Total (A) (2) 359,649,988 77,431,534# 91.50 273,866,980 99.58 Total unit holding of 475,134,790 192,916,336# Sponsor & Sponsor Group (A) = (A)(1) + (A)(2)
# Pursuant to Regulation 11(3)(a) of the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014, as amended, the sponsors and sponsor group are required to collectively hold a minimum of 25% of the total units of the REIT after initial offer on a post-issue basis for a period of three years. Embassy Property Developments Private Limited (Sponsor) holds 14.97% and BRE/ Mauritius Investments (“Blackstone Sponsor”) (Sponsor) holds 10.03% of total outstanding units (together constituting the minimum holding of 25%).
Half-Yearly Report 2020-21 59 GOVERNANCE (CONTD.) Embassy REIT’s Philosophy on Corporate Governance
No. of As a % of Total + Category Category of Unit holder Units Held Out- standing Units (1) Institutions (a) Mutual Funds 13,313,200 1.73 (b) Financial Institutions/Banks (c) Central/State Govt. (d) Venture Capital Funds (e) Insurance Companies 2,323,000 0.30 (f) Provident/pension funds 238,800 0.03 (g) Foreign Portfolio Investors 199,844,600 25.90 (h) Foreign Venture Capital Investors (i) Any Other:- 1,369,400 0.18 Alternative Investment Fund Sub- Total (B) (1) 217,089,000 28.13 (2) Non-Institutions (a) Central Government/State Governments(s)/President of India (b) Individuals 72,800,986 9.43 (c) NBFCs registered with RBI 584,400 0.08 (d) Any Other (specify) i. Trusts 17,600 0.00 ii. Non-Resident Indians 978,400 0.13 iii. Clearing Members 215,354 0.03 iv. Body Corporates 4,844,813 0.63 Sub- Total (B) (2) 79,441,553 10.29 Total Public Unit holding (B) = (B)(1)+(B)(2) 296,530,553 38.43 Total Units Outstanding (C) = (A) + (B) 771,665,343 100.00
Meetings of the unitholders i. During the six months ended September 30, 2020, the second annual meeting of the Unitholders of the Embassy REIT was held on Thursday August 27, 2020 at 11.10 AM IST through Video Conferencing (“VC”)/ Other Audio Visual Means (“OAVM”). The necessary quorum was present for the meeting through VC and OAVM. ii. The following items were inter alia considered at the said annual meeting of the Unitholders: • C onsideration, approval and adoption of the audited condensed standalone financial statements and audited condensed consolidated financial statements of Embassy REIT as at, and for the financial year ended March 31, 2020 together with the report of the auditors thereon for the financial year ended March 31, 2020 and the report on performance of Embassy REIT. • C onsideration, approval and adoption of the valuation report issued by Mr. Manish Gupta, Partner, iVAS Partners, the valuer, for the valuation of the portfolio as at March 31, 2020. • C onsideration and approval of the appointment of the valuer and value assessment service provider for the financial years 2020-21 to 2022-23. • A pproval through special resolution of the Unit-Based Employee Incentive Plan 2020 wherein units are proposed to be contributed as corpus to the Employee Welfare Trust (‘EWT’) by Blackstone Sponsor Group and Embassy Sponsor without any fresh issuance by Embassy REIT or any dilution to public Unitholders at this time. • To authorise the EWT for secondary market acquisition of Units of Embassy REIT.
Investor complaints Details of investor complaints received and redressed during the year ended September 30, 2020 are as follows:
Received during the year ended Resolved during the year ended Opening Balance Closing Balance September 30, 2020 September 30, 2020 Nil Nil Nil Nil
During the quarter ended September 30, 2020, Embassy REIT had received a letter through the SEBI SCORES portal. The letter was not in respect of the Embassy REIT and an appropriate response was provided by Embassy REIT. Thereafter, the letter was withdrawn.
60 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Company secretary and compliance officer Mr. Ramesh Periasamy till August 06, 2020 Ms. Deepika Srivastava w.e.f. August 07,2020 Royal Oaks, Embassy Golf Links Business Park, Off Intermediate Ring Road, Bengaluru, Karnataka – 560071.
Statutory auditors S. R. Batliboi & Associates LLP (ICAI Firm Registration No.: 101049W/ E300004) Chartered Accountants, having their office at 12th Floor, “UB City”, Canberra Block No. 24, Vittal Mallya Road, Bengaluru- 560001 have been appointed as the Statutory Auditors of the Embassy REIT for a term of five consecutive years from the financial year 2019 – 20.
Debenture Trustees for NCDs issued by the Embassy REIT a. Catalyst Trusteeship Limited, as Debenture Trustee to the issue of ` 3,650 Crores raised by way of Private Placement. b. SBICAP Trustee Company Limited, as Debenture Trustee to the issue of ` 750 Crores raised by way of Private Placement
Registrar and transfer agent Name and Address: Kfin Technologies Private Limited (formerly Karvy Fintech Private Limited) Karvy Selenium Tower B, Plot 31-32, Gachibowli, Financial District, Nanakramguda, Hyderabad 500 032, Telangana, India Telephone : +91 40 6716 2222 Fax : +91 40 2343 1551 E-mail : [email protected] Website : http://www.kfintech.com
Publications The information required to be disclosed to the stock exchanges (including financial results, press releases and presentations made to the investors) have been duly submitted to the National Stock Exchange of India Limited and BSE Limited as well as uploaded on Embassy REIT’s website, Further Embassy REIT has opted voluntarily to publish newspaper advertisements in relation to its the financial results.
Market Price Data: High, Low (based on daily closing prices) and the number of REIT Units traded during each month for the year ended September 30, 2020 on the BSE and NSE:
BSE NSE Month Total Number of Total Number of High (`) Low (`) High (`) Low (`) REIT Units Traded REIT Units Traded April, 2020 385.00 319.00 16,218,800 381.00 319.29 7,066,000 May, 2020 365.77 322.56 644,200 370.00 322.42 6,609,800 June, 2020 397.70 335.10 71,386,400 397.40 334.61 13,378,000 July, 2020 369.00 332.00 559,400 369.79 333.55 14,155,600 August, 2020 387.00 345.10 1,236,000 387.00 355.00 6,929,000 September, 2020 371.99 353.05 3,836,600 373.85 352.85 13,371,800
Transfer of Units: The Embassy REIT’s Units are in dematerialised form and transfers of Embassy REIT’s Units are effected through the depositories.
Half-Yearly Report 2020-21 61 STATUTORY DISCLOSURES as stipulated under Schedule IV read with Regulation 23(4) of SEBI REIT Regulations, 2014
1 BUSINESS & FINANCIAL SUMMARY b. Location of the properties a. Manager’s brief report on the activities Please refer to pages 32-47 of this report of the REIT: Embassy REIT was settled on March 30, 2017 at c. Area of the properties Bengaluru, Karnataka, India as an irrevocable Please refer to pages 32-47 of this report trust under the provisions of the Indian Trusts Act, 1882 pursuant to a trust deed dated March d. Current tenants (top 10 tenants as per value of 30, 2017 as amended on September 11, 2018. The lease) and lease maturity profile Sponsors of Embassy REIT are Embassy Property The top 10 tenants of each of the Asset SPV’s Developments Private Limited (“Embassy as per the value of the lease are tabled below Sponsor”) and BRE/Mauritius Investments (in alphabetical order): (“Blackstone Sponsor”). For further details please refer to page 3 of this report. Name of the Asset SPV Name of the Tenant Vikhroli Corporate • Accelya Kale Solutions Limited Embassy REIT owns a high-quality office portfolio Park Private • ATC Tires Pvt. Ltd. comprising of seven best-in-class office parks and Limited-247 Tech • DHL Global Forwarding Freight four prime city center office buildings totalling park Shared Services (India) LLP 33.3 msf as of September 30, 2020. For further • Future Retail Limited details on the properties please refer to pages • Gravitas Technology Private 32 ‑47 of this report. Limited • ICICI Lombard General Embassy REIT was listed on the BSE and NSE on Insurance Company Limited April 01, 2019 after an initial public offering that • Link Intime India Private was oversubscribed by 2.6 times. Limited • Oppo Mobiles India Private With respect to the half year ended September Limited 30, 2020 our updates on Commercial offices • Vistra International Expansion and Development are set forth on pages 18-19 (India) Private Limited respectively. • WeWork India Management Private Limited The NAV of Embassy REIT as on September 30, 2020 was Rs 375.02 per unit. Embassy One-Four • Korean Trade-Investment Seasons Promotion Agency With respect to trading price, kindly refer to page • The State of The Netherlands 61 of this report. Indian Express • Blackstone Advisors India b. Summary of the unaudited standalone and Newspapers Private Limited consolidated financial statements (Mumbai) Pvt Ltd • DBS Bank India Limited. Please refer to pages 81-211 of this report. • Enam Holdings Pvt. Ltd. • Export Credit Guarantee 2 BRIEF DETAILS OF ALL THE ASSETS Corporation of India ENAM OF THE REIT INCLUDING A BREAK-UP Holdings Private Limited OF REAL ESTATE ASSETS AND OTHER • JBF Industries Limited ASSETS, LOCATION OF THE PROPERTIES, • McKinsey & Company, Inc AREA OF THE PROPERTIES, CURRENT • NVP Venture Capital India TENANTS (NOT LESS THAN TOP 10 Private Limited TENANTS AS PER VALUE OF LEASE), • Shardul Amarchand Mangaldas LEASE MATURITY PROFILE, DETAILS OF & Co UNDER-CONSTRUCTION PROPERTIES, IF • The Indian Hotels Company ANY, ETC. Limited a. Real estate assets and other assets • Warburg Pincus India Private Please refer to pages 32-47 of this report Limited
62 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 63 Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Name of the Asset SPV Name of the Tenant Name of the Asset SPV Name of the Tenant Earnest Towers • Executive Centre India Private • Jubilant Foodworks Ltd Private Limited Limited • Luxoft India LLP • FIFC Condominium • Storybook Ventures Pvt Ltd • Google India Private Limited • Vodafone Idea Limited • Impresario Entertainment and Hospitality Private Limited Qubix Business Park • Accenture Services Private • Kasa Foodworks Private Limited Limited • Massive Restaurants Private • Aker Powergas Subsea Private Limited Limited • McKinsey & Company India LLP • Cisco Systems (India) Private • Mirah Hospitality and Gourmet Limited Solutions Private Limited • Crisil Limited • Oracle India Private Limited • HCL Technologies Limited • Pernod Ricard India Private • KPIT Technologies Limited Limited • Larson & Toubro Infotech Limited Galaxy Square • DXC Technology India Private • Persistent Systems Limited Private Limited Limited • Sciformix Technologies Private • Elixir Softech Private Limited Limited • Esaote Asia Pacific Diagnostic • Tata Technologies Limited Private Limited • Fiserv India Private Limited Manyata Promoters • Alcatel-Lucent India Limited • HDFC Bank Limited Private Limited • ANSR Global Corporation • Jubilant Foodworks Limited Private Limited • Mitel Communications Private • Cerner HealthCare Solutions Limited India Private Limited • Next Gen Services • Cognizant Technology • Tata Consultancy Services Limited Solutions India Private Limited • Xylem Water Solutions Private • IBM India Private Limited Limited • Lowe’s Services India Private Limited Oxygen Business • Bharti Airtel Limited • Nokia Solutions & Networks Park Private Limited • ExlService.com (India) Private India Private Limited Limited • Nvidia Graphics Private • Global Logic India Private Limited Limited • Jubilant Foodworks Limited • Target Corporation India • MetLife Global Operations Private Limited Support Center Private Limited • Wework India Management • Newgen Software Technologies Private Limited Limited • NTT Data Information Embassy Office • Flextronics Technologies Processing Services Private Parks Private Limited (India) Private Limited Limited • IBM India Private Limited • Optum Global Solutions (India) • Infosys BPM Limited Private Limited • Larsen & Toubro Infotech • Sapient Consulting Private Limited Limited • Vodafone Idea Limited • Nitor Infotech Private Limited • Nice Interactive Solutions India Quadron Business • Barclays Global Service Centre Private Limited Park Private Limited Private Limited • Rockwell Automation India • Cognizant Technology Private Limited Solutions India Private Limited • State Street HCL Services E-CLERX Services Limited (India) Private Limited • EIT Services India Limited • Tech Mahindra Limited • Glow Energy • Volkswagen India Private • Humane Business Intelligence limited Technology Solutions Private Limited
62 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 63 STATUTORY DISCLOSURES (CONTD.) as stipulated under Schedule IV read with Regulation 23(4) of SEBI REIT Regulations, 2014
Additionally, for the top 10 tenants of Embassy REIT, September 30, 2020. The occupancy of Embassy please refer to page 16 of this report. REIT as of September 30, 2020 was 91.7% as against the occupancy of 92.8% as of the start of For the lease maturity profile of each Asset SPV, please this year. The WALE of Embassy REIT is set forth refer to pages 17-18 of this report. on page 17. The current list of key tenants is set forth on page 16. e. Details of under-construction properties, if any, etc. b. Borrowings/repayment of Please refer pages 109-112 of this report borrowings(standalone and consolidated) Please refer to pages 109-112 of this report with 3 BRIEF SUMMARY OF THE FULL respect to borrowings on a standalone basis VALUATION REPORT AS AT THE END OF as on September 30, 2020 and page 178-181 THE YEAR of this report with respect to borrowings on a Please refer to pages 212-252 of this report consolidated basis, as on September 30, 2020.
4 DETAILS OF CHANGES DURING THE YEAR Please refer to pages 178-181 of this report PERTAINING TO: with respect to repayment of borrowings on a a. Addition and divestment of assets including the consolidated basis, as on September 30, 2020. On identity of the buyers or sellers, purchase/sale the standalone basis, as on September 30, 2020, prices and brief details of valuation for such the repayment of borrowings was NIL. transactions. There has been no addition or divestment of assets c. Sponsors, manager, trustee, valuer, directors of in the half year ended September 30, 2020. the Trustee/manager/sponsor, etc. There was no change in the Sponsors, Manager b. Valuation of assets (as per the full valuation and Trustee during the six months ended reports) and NAV September 30, 2020. iVAS Partners, represented by Please refer to pages 212-252 of this report for Mr. Manish Gupta, partner, has been appointed as Gross Asset Valuation and pages 128-129 for NAV the valuer of Embassy REIT for the financial years respectively. 2020‑21, 2021-22, 2022-23 pursuant to a resolution approved by the Unitholders at their annual 5 DETAILS OF CHANGES DURING THE YEAR meeting held on August 27, 2020. CBRE South PERTAINING TO: Asia Private Limited has been appointed to provide a. Letting of assets, occupancy, lease maturity, value assessment services to Embassy REIT for the key tenants, etc. financial years 2020‑21, 2021-22, 2022-23. Please refer to pages 17-18 of this report with respect to the new leases for the year ended
The below table indicates the change of directors of the trustee/manager/sponsor for the half-year ended september 30, 2020 Entity Nature of Change Axis Trustee Services Limited (“TRUSTEE”) No change in the composition of the board of directors 1. Embassy Office Parks Management Services Private No change in the composition of the board of directors Limited (“Manager”) Embassy Property Developments Private Limited No change in the composition of the board of directors (“Embassy Sponsor”) BRE/Mauritius Investments (“Blackstone Sponsor”) No change in the composition of Directors except below: 1. Resignation of Mr. Kimmo Tammela as a Director and appointment of Mr. Eugene Min wef April 29, 2020 and 2. Resignation of Mr. Richard Arlove as a director and appointment of Mr. Keni Lufor w.e.f September 24, 2020 d. Clauses in trust deed, investment management e. Any other material change during the year agreement or any other agreement entered Nil into pertaining to activities of REIT Not Applicable
64 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 65 Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
6 UPDATE ON DEVELOPMENT OF UNDER- 8 DEBT MATURITY PROFILE OVER EACH CONSTRUCTION PROPERTIES, IF ANY OF THE NEXT 5 YEARS AND DEBT Please refer to page 19 of this report COVENANTS, IF ANY Please refer to the table in S.no 6 above for 7 DETAILS OF OUTSTANDING BORROWINGS the debt maturity profile. With respect to debt AND DEFERRED PAYMENTS OF REIT covenants please refer to pages 178-181 of this INCLUDING ANY CREDIT RATING(S), DEBT report. MATURITY PROFILE, GEARING RATIOS OF THE REIT ON A CONSOLIDATED AND 9 THE TOTAL OPERATING EXPENSES OF STANDALONE BASIS AS AT THE END OF THE REIT, INCLUDING ALL FEES AND THE YEAR CHARGES PAID TO THE MANAGER AND Please refer to pages 109-112 and 178-181 of ANY OTHER PARTIES, IF ANY DURING this report THE YEAR Please refer to pages 188 and 198-202 of this report 10 PAST PERFORMANCE OF THE REIT WITH RESPECT TO UNIT PRICE, DISTRIBUTIONS AND YIELD FOR THE LAST 5 YEARS, AS APPLICABLE AND UNIT PRICE QUOTED ON THE DESIGNATED STOCK EXCHANGES AT THE BEGINNING AND END OF THE FINANCIAL YEAR, THE HIGHEST AND LOWEST UNIT PRICE AND THE AVERAGE DAILY VOLUME TRADED DURING THE FINANCIAL YEAR
Particulars NSE BSE Unit Price (Rs.) Opening: April 1, 2020 351.00 350.20 Closing: September 30, 2020 360.78 361.00 52 Week High 512.00 518.00 52 Week Low 301.35 301.00 Market Capitalisation (Rs. Bn) September 30, 2020 278.40 278.57 Volume - Half year ended September 30, 2020 Units Million 61.51 93.88 Rs. Billion 21.96 31.91 ADTV - Half year ended September 30, 2020 Units 492,082 751,051 Rs. Million 176 255
Source: National Stock exchange (Designated) and Bombay Stock exchange
11 RELATED PARTY TRANSACTIONS of rupee denominated, listed, rated, secured, a. Refer to pages 205-207 of this report which redeemable, transferable, non-convertible contains details of all related party transactions debentures by Embassy REIT on a private entered into by the Embassy REIT and its Asset placement basis for an aggregate amount of SPVs during the year ended September 30, 2020 `15,000,000,000/- (Rupees One Thousand Five (excluding transactions between Embassy REIT Hundred Crores only) split into One or more and its Asset SPVs which are eliminated on Tranches. Further Debenture Committee, at its consolidation). meeting held on September 09, 2020, had approved the allotment of 7,500 rupee b. Refer to pages 116-119 of this report which denominated, listed, rated, secured, redeemable, contains details of all related party transactions transferrable, non-convertible debentures of entered into by Embassy REIT including monies `10,00,000 only/- (Indian Rupees ten lakh) lent by Embassy REIT to its holding company and per debenture, aggregating to `750,00,00,000/- its SPVs. (Indian Rupees seven hundred and fifty crores only) on a private placement basis under Tranche 12 DETAILS OF FUND-RAISING DURING THE A as per the terms and conditions as mentioned PERIOD ENDED SIX MONTHS in the Information Memorandum for the said issue. The Debenture Committee of the Board of Directors of the Manager of Embassy REIT The above mentioned Non-Convertible Debentures (“Debenture Committee”) in their meeting held are listed on the Wholesale Debt Market (WDM) on September 01, 2020 had approved the issue Segment of BSE Limited.
64 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 65 STATUTORY DISCLOSURES (CONTD.) as stipulated under Schedule IV read with Regulation 23(4) of SEBI REIT Regulations, 2014
13 BRIEF DETAILS OF MATERIAL AND PRICE Municipal Corporations Act, 1976, and the SENSITIVE INFORMATION Karnataka Municipal Corporations (Recovery Not applicable of Improvement Expenses) Rules, 2009, and (ii) a notice from 2015 demanding payment of 14 BRIEF DETAILS OF MATERIAL betterment charges of `127.9 Million. In 2016, LITIGATIONS AND REGULATORY ACTIONS the High Court of Karnataka has granted an WHICH ARE PENDING AGAINST THE interim stay on the impugned circular and REIT, SPONSOR(S), MANAGER OR ANY notice. OF THEIR ASSOCIATES AND SPONSOR GROUP(S) AND THE TRUSTEE IF ANY, AS . b A third party suit was filed against MPPL and AT THE END OF THE YEAR other defendants (who are co-owners in joint Legal and other information possession with the plaintiff) in 2020 before This section discloses all outstanding material the City Civil Court, Bengaluru seeking (i) litigation and regulatory action against Embassy 1/8th share of property by way of partition; REIT, the Sponsors, the Manager, their respective (ii) a declaration that the panchayth parikath Associates, the Blackstone Sponsor Group and alias partition deed dated February 20, 1997, the Trustee (the “Relevant Parties”). Details of sale deeds executed in favour of MPPL are all outstanding regulatory actions and criminal void ab-initio and (iii) award of mesne profit to proceedings against the Relevant Parties have the plaintiff. The matter was heard on January been disclosed. Only such outstanding civil/ 28, 2020 and was ordered for issuance of commercial matters against the Relevant Parties summons and interlocutory application to have been disclosed where amounts involved are the defendants. in excess of the materiality thresholds disclosed below. All property tax, direct tax and indirect tax . c An regular first appeal has been filed by a third matters against the Relevant Parties have been party against MPPL and other defendants disclosed in a consolidated manner. before the High Court of Karnataka seeking quashing of an order dated October 16, “ Associates” of a person shall be as defined under 2019 passed by the Additional City Civil the Companies Act, 2013, or under applicable and Sessions Judge, Bengaluru (“Order”) in accounting standards, and shall also include: (i) respect of inter alia a land parcel admeasuring any person directly or indirectly controlled by the approximately 3 acres located in Embassy said person; (ii) any person who directly controls Manyata. The order inter alia decreed that the the said person; (iii) where the said person is a appellant could not claim for possession of company or a body corporate, any person(s) the relevant land parcel but could only seek who is designated as a promoter of the company compensation. The plaintiff were provided or body corporate and any other company or relief in respect of other land parcels (not body corporate and any other company or body connected to Embassy Manyata) as the Order corporate with the same promoter; and (iv) where also decreed that the plaintiff is entitled to the said person is an individual, any relative of the possession of the other land parcels. The individual. With respect to the Manager and the land parcel in question was initially acquired Sponsors, only entities which directly control the by the State Government of Karnataka which Sponsors or the Manager, as applicable, have been handed it over to KIADB. The last hearing in considered under (ii). the matter was on January 31, 2020 and the next date of hearing is awaited. I. Material title litigation pertaining to the Portfolio A co-defendant in the original suit filed before For the purpose of this section, details of all Additional Judge, City Civil Court, Bengaluru pending material title litigation pertaining to the has filed has filed a miscellaneous petition Portfolio have been disclosed. Other than as dated September 8, 2020 before the City Civil disclosed below, there are no pending material Court, Bengaluru to set aside the order dated title litigations pertaining to the Portfolio as of October 16, 2019 and the matter is pending September 30, 2020: for hearing.
A. Embassy Manyata . d A third-party suit has been filed against MPPL . a MPPL has filed a writ petition against the and other defendants on September 23, 2020 BBMP and others seeking to inter-alia, before the Principal City and Sessions Judge, quash (i) a circular from 2014 re-fixing the Bengaluru seeking possession of a land parcel improvement charges under the Karnataka admeasuring 1 acre and 12 guntas forming
66 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 67 Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
part of Embassy Manyata. The plaintiff claims that no encumbrance will be created on the suit that the land parcel was mortgaged by his property of 94,000 sft. ancestors in 1905 and they were unable to discharge the entirety of the mortgage C. Express Towers debt. The plaintiff now wishes to redeem the . a IENMPL has filed a writ petition against mortgaged premises and repossess the lands the Government of Maharashtra and the by making payment of the mortgage debt. The Collector, Mumbai in 2003 before the Bombay matter is currently pending for hearing. High Court, challenging the demand against IENMPL for payment of increased transfer . e A third party has filed a writ petition charges in relation to a sub-lease. While dated September 19, 2019 against State transfer charges amounting to `0.12 Million of Karnataka (Department of Industries annually for 61 years as per GoI’s letter were and Commerce), Special Land Acquisition levied in 2001, the transfer charges were Officer, KIADB, MPPL and others before the revised to `2.34 Million in the same year by High Court of Karnataka in connection with the Collector, Bombay. In 2004, the Bombay acquisition proceedings initiated by the state High Court passed an order staying the government with respect to inter alia land operation of demand for increased transfer admeasuring 1 acre at Nagavara Village which charges, subject to IENMPL continuing to currently forms part of Embassy Manyata. pay the original transfer charges. IENMPL has The third party has sought: (i) quashing of also undertaken that in the event of dismissal the orders in the acquisition proceedings of petition they shall pay the demanded on the ground that the compensation was increased transfer charges. determined arbitrarily; (ii) an award from the state government paying compensation in . b IENMPL had initiated legal proceedings accordance with the provisions of the Right to against a occupier before the Court of Small Fair Compensation and Transparency in Land Causes, Mumbai in 2007 for eviction and Acquisition, Rehabilitation And Resettlement recovery of possession of 2,150 square feet Act, 2013; and (iii) quashing the acquisition of in Express Towers and for mesne profits. the land parcel admeasuring approximately 1 On November 15, 2011, the court directed acre. The matter is currently pending. the occupier to pay `0.26 Million per month towards mesne profits for the period between The third party had earlier filed a writ petition March 1, 2007 and February 2010, and `0.29 in 2003 and a writ appeal in 2004, against the Million per month March 1, 2010 onward. State of Karnataka (Department of Industries An appeal by the occupier against this and Commerce), Special Land Acquisition order before the Court of Small Causes was Officer, KIADB, MPPL and others, both of dismissed on May 6, 2015. Aggrieved, the which were rejected. Subsequently, a special occupier filed a petition before the Bombay leave petition and a review petition were High Court. On August 28, 2017, the High also filed before the Supreme Court which Court passed an order directing the occupier were dismissed in September 2004 and to pay `225 per square foot per month from September 2009. May 1, 2015 to continue the possession of the premises. The occupier continues to occupy B. Hilton at Embassy Golflinks the premises and pay rentals. A third party has filed a suit against GLSP, UPPL Mac Charles (India) Limited and others in 2003 . c A criminal public interest litigation has been before the City Civil Court, Bengaluru, seeking instituted by a third party against the state specific performance of an agreement for sale of Maharashtra and others in 2017 which has for 94,000 square feet of land forming part of the alleged irregularities in the manner in which larger parcel of land admeasuring 5 acres and Express Towers was being used, and the 23 guntas situated at Challaghatta village. The manner in which the shareholders of IENMPL court dismissed the suit in 2008. The plaintiff has have acquired the asset. IENMPL impleaded challenged such dismissal in 2009 before the High itself as party to this public interest litigation. Court of Karnataka in an appeal. GLSP and UPPL The Bombay High Court had directed the have been arraigned as respondents in the appeal. third party to file an amended petition to, The High Court of Karnataka has recorded the inter alia, include IENMPL as a party, which submission made by GLSP and UPPL indicating has been filed by the third party on February
66 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 67 STATUTORY DISCLOSURES (CONTD.) as stipulated under Schedule IV read with Regulation 23(4) of SEBI REIT Regulations, 2014
27, 2019. The last date of hearing in the said to sell executed in 1995 and, (ii) grant of matter was August 5, 2019 when the matter permanent injunction to restrain all the was adjourned. defendants from interfering with the land parcel or in the alternative, refund `3.96 Million to D. Embassy Golflinks the plaintiffs. Pursuant to a writ petition filed . a Certain third parties have filed a suit by one of the defendants, the High Court of for partition in 2005 against their family Karnataka stayed the suit in 2014. The City members and GLSP before the City Civil Civil Court, Bengaluru on January 7, 2020 Court, Bengaluru, in respect of a land parcel has ordered defendants excluding GLSP, to admeasuring 4 acres and 1 guntas, where refund `1.43 Million with interest from the GLSP is entitled to two acres and 21 guntas, date of the agreement until its realisation to forming part of Embassy Golflinks wherein the plaintiffs within three months. the court passed a preliminary decree for partition. GLSP has filed an appeal in . e Certain third parties have filed an application 2013 before the High Court of Karnataka in 2007, before the Court of City Civil Judge, challenging the decree. The High Court has Bengaluru against GLSP and another third passed interim orders in 2015 and stayed party seeking an injunction restraining them the decree. The matter came up for hearing from alienating or creating any third party on September 23, 2019 wherein it was interest in a land parcel admeasuring 2 acres adjourned and the matter is yet to be listed for and 14 guntas, forming part of Embassy final hearing. Golflinks. The court passed an interim order in 2007 which has been subsequently vacated . b A third party individual has filed a suit before by the court and the matter is currently Court of the City Civil Judge, Bengaluru in pending. The third party claimants have 2005, against GLSP and others for declaring also filed a claim in 2009 against GLSP and a sale deed allegedly executed in 2004 by others, before the High Court of Karnataka him in favour of GLSP and another pertaining seeking appointment of an arbitrator and to a portion of land situated at Embassy an arbitrator was appointed by an order in Golflinks, as null and void on account of fraud 2015. The claimants sought (i) performance and misrepresentation. The plaintiff died at of joint development agreements executed the evidence stage and his alleged heir was in 2004 and 2005, against GLSP and another not permitted to come on record as the individual, pertaining to the land parcel before court rejected his application by passing the arbitrator, and (ii) an injunction to restrain an order in 2015. Aggrieved by the order, the respondents from alienating or creating the alleged heir filed a civil revision petition any third-party interests in the building before the High Court of Karnataka in 2015 constructed on the land parcel, before the which was subsequently converted into a writ arbitrator. The matter is currently pending. petition and the next date of hearing is yet to be fixed. . f GLSP has filed a petition in 2014 before the High Court of Karnataka inter-alia, against a show . c Certain third parties have filed a suit in 2008 cause notice issued under the Public Premises before the City Civil Court, Bengaluru in (Eviction of Unauthorised Occupation) Act, respect of a land parcel admeasuring 1 acre and 1971, in relation to eviction of GLSP from 21 guntas, forming part of Embassy Golflinks. certain parcels of land admeasuring 92 square The suit was dismissed in 2013 due to no meters, 274.86 square meters and 2,079.79 representation on behalf of the plaintiffs. square meters in Domlur Village, Bengaluru, The plaintiffs filed a petition before the City which as per the show cause notice allegedly Civil Judge, Bengaluru in 2013 to set aside belongs to the Department of Defence and the dismissal order and restore the suit, along seeking a direction against the BBMP and with an application for condonation of delay. others to complete the construction of the GLSP has filed objections to the petition. road on the aforementioned lands. The High Court in 2014 directed BBMP to continue . d A third party has filed a suit against GLSP and with the construction of the road in terms others before the City Civil Court, Bengaluru of certain agreements signed between the in 2004, directing (i) certain defendants apart Department of Defence and BBMP and also from GLSP to execute sale deeds in respect of restrained the respondents from acting upon a land parcel admeasuring 1 acre and 36 guntas, the impugned notice or taking coercive steps forming part of Embassy Golflinks in favour against GLSP. The respondents have obtained of the plaintiff by virtue of an agreement a stay on such order in 2016 by way of an
68 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 69 Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
appeal filed in 2015 before the High Court and criminal matters against the Asset SPVs and of Karnataka. The stay order also stated that the Investment Entity have been disclosed. GLSP cannot be evicted without the leave of court. The High Court of Karnataka in 2019 For the purpose of pending civil/ commercial has disposed the appeal. matters against Embassy REIT (Asset SPVs and Investment Entity), and Associates of Embassy . g A third party has filed a suit before the City REIT (excluding the Manager, the Sponsors, their Civil Court, Senior Division, Rural District respective Associates and the Blackstone Sponsor against GLSP and others alleging that the Group) matters exceeding `214.70 Million (being 1% defendants and GLSP have colluded with each of the consolidated income as of March 31, 2020) other to sell certain parcels of land belonging have been considered material and proceedings to the petitioner, admeasuring 12 guntas, where the amount is not determinable but the 1 acre 9 guntas and 15 guntas respectively proceeding is considered material by the Manager and forming part of Embassy Golflinks to from the perspective of Embassy REIT has GLSP. The petitioner has alleged that the been disclosed. sale deed executed in 2003 is not binding on the petitioner. The suit was dismissed in 2016 Other than as disclosed below, there are no for default by the petitioner. The petitioner pending criminal litigation, regulatory actions has thereafter filed an application seeking to or material civil/ commercial matters against restore the case and the summons are yet to any of the Asset SPVs or the Investment Entity be served on some of the respondents.. or the Associates of Embassy REIT (excluding the Manager, the Sponsors, their respective . h GLSP received a notice from a third party Associates and the Blackstone Sponsor Group) individual alleging that certain third parties as of September 30, 2020. Further, there is were the absolute owners of land in possession no litigation against Embassy REIT as of of GLSP admeasuring 2 acres and 8 guntas in September 30, 2020. Bengaluru. The IX Additional City Civil and Sessions Judge, pursuant to a preliminary A. MPPL decree in 2017, granted the petitioner half (a) Regulatory Proceedings a share in the land. GLSP was not made a . i The Director, SEZ Section, GoI issued party to the above suit filed by the third party. guidelines in 2009 which laid down that GLSP has filed an appeal in the High Court captive power plants in IT/ ITES SEZs of Karnataka to set aside the decree of the were to be classified as separate units IX Additional City Civil and Sessions Judge and were entitled to avail fiscal benefits and to remand the suit to the trial court by under the SEZ Act including the benefit impleading GLSP as a defendant. Currently, of exemption from the levy of excise duty the matter is in the admission stage and under the Central Excise Act, 1994, on the High Court of Karnataka has requested the goods supplied to them. However, that the lower court records to be produced in 2015, a new circular was issued which before it. withdrew all such benefits and incentives extended to the captive power plants set E. Embassy Qubix up in a SEZ with effect from April 1, 2015. A third party had filed an application before the In 2016, new guidelines were issued which Tahsildar, Mulshi, Pune for recording his name on restored the benefits and exemptions an extract of land underlying Embassy Qubix as given under the 2009 circular. However, per a particular mutation entry. Pursuant to an the exemptions and benefits were order dated June 26, 2020, the Tahsildar held prospective in nature and did not apply that the applicant should seek relief before the to SEZ developers, such as MPPL, for the competent court in relation to the subject matter period between the 2015 circular and the and dismissed the application. The applicant has 2016 guidelines. By way of their letters filed an appeal dated September 7, 2020 against in 2016, two diesel providers who were such order before the Sub-Divisional Officer, Pune. providing high speed diesel to MPPL, Please note that the land parcels under litigation informed MPPL that amount payable does not form part of the Embassy Qubix. due to excise duty on supply of diesel to MPPL was `31.60 Million and `8.49 II. Material litigation and regulatory action Million, respectively, due to the changed pending against Embassy REIT (Asset SPVs and guidelines. MPPL filed an application the Investment Entity) before the Development Commissioner, With respect to the Asset SPVs and the Investment Manyata Embassy Business Park SEZ in Entity, details of all pending regulatory actions 2016 seeking approval of its DG set unit
68 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 69 STATUTORY DISCLOSURES (CONTD.) as stipulated under Schedule IV read with Regulation 23(4) of SEBI REIT Regulations, 2014
as a SEZ unit with retrospective effect, interest on delayed payment of `40 Million which was not granted. Subsequently, calculated for specified periods mentioned MPPL filed an appeal before the therein. An order was passed on September Development Commissioner, Manyata 7, 2018 allowing part of the claim. Additionally, Embassy Business Park SEZ seeking an execution petition was filed before the modification of the letter of approval City Civil Court in 2019 by the award holder. granted by the Board of Approval, SEZ However, this execution petition has been Section to classify MPPL’s captive power stayed pursuant to an appeal filed against plant as a SEZ unit, as it was not granted the order in 2019 before the City Civil Court, with retrospective effect, which was Bengaluru. This matter has been shifted rejected. MPPL has filed a writ petition in to Commercial Courts, Bengaluru as per 2017 before the High Court of Karnataka notification dated August 17, 2020 issued by to set aside the said order and a stay the City Civil Court, Bengaluru. order has been granted. B.L EEP ii. MPPL has also received a demand order Regulatory Proceedings dated October 9, 2017 to pay a sum . a The Karnataka Electricity Regulatory of `760.07 Million (including penalty) Commission has issued orders in 2005, towards the differential property tax 2008 and 2014 granting exemption to all based on the total survey report for solar power generators in Karnataka that certain blocks for the period 2008- achieved commercial operation date between 09 to 2017-18. An appeal has been April 1, 2013 and March 31, 2018 from paying filed before the Joint Commissioner, certain charges such as, inter alia, payment of BBMP, Bytarayanapura, Bengaluru wheeling and banking charges, cross subsidy (“Joint Commissioner”) objecting the surcharges, transmission losses and wheeling total survey report and property tax losses for a period of ten years from the date assessment notice arising therefrom. of commissioning. The Commission issued an New demand notices dated January 17, order in 2018 withdrawing the aforementioned 2019 were issued to pay a sum of ` 860.39 exemption available to Karnataka’s power Million (including penalty) towards the generators, including EEPL. Subsequently, differential property tax for the period EEPL and others have filed writ petitions in 2008-09 to 2017-18 and interest up to 2018 in the High Court of Karnataka against the the date of payment as per the demand State of Karnataka, the Karnataka Electricity notices. MPPL has submitted a letter to Regulatory Commission, Bangalore Electricity the Joint Commissioner dated March 29, Supply Company Limited, Gulbarga Electricity 2019 referring to the appeals preferred Supply Company Limited and Karnataka by MPPL and had paid a sum of `286.80 Power Transmission Corporation Limited. Million towards property tax demanded In the event of cancellation of the aforesaid under protest. An order was passed exemption, EEPL would incur an estimated by the Joint Commissioner dismissing loss of approximately `1,053.50 Million over a the appeal preferred by the MPPL. ten year period. The High Court of Karnataka Against the order passed by the Joint by way of an order dated May 24, 2018 has Commissioner, MPPL has challenged directed interim stay on the Commission’s the order dated January 3, 2018 passed order withdrawing the aforesaid exemptions. by the Appellate Authority before the The Bangalore Electricity Supply Company Hon’ble High Court of Karnataka. Limited filed an interlocutory application on June 18, 2018, seeking vacating of the interim (b) Other Material Litigation order dated May 24, 2018 passed by the High C ertain third parties have filed a petition Court of Karnataka, and Karnataka Electricity against MPPL and others before an arbitral Regulatory Commission has filed common tribunal in 2018, where such third parties preliminary objections on September 27, 2018 have prayed for an award directing MPPL and and requested the High Court of Karnataka others, in accordance with a memorandum to dismiss the writ petition filed by EEPL and of agreement entered into between the others. The High Court of Karnataka, by way third parties and MPPL to pay, (i) `90 Million of an order dated March 13, 2019, allowed the along with interest at 18% per annum from writ petitions filed by EEPL and others, and September 3, 2008 to date of realisation (ii) quashed the order dated May 14, 2018 issued `7.52 Million as interest on delayed payment by the Karnataka Electricity Regulatory of `70 Million calculated for specified periods Commission. EEPL has filed a caveat petition mentioned therein, and (iii) `19.39 Million as for receiving notifications in case any intra
70 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 71 Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
court writ appeal filed by any of the parties and not from EEPL, and therefore the sub- to the said petition, before the Division Bench contractor has no claim against EEPL. By its of the High Court of Karnataka. Karnataka letters dated March 18, 2019, the subcontractor Electricity Regulatory Commission has filed has responded to the letter from EEPL, a common writ appeal against the said order, denying all statements made by EEPL and against EEPL & Others. Electricity Supply reiterating that the unpaid amounts are due Companies have also filed writ appeals from EEPL, without prejudice to any action, against some of the petitioners, but no appeal including criminal, that may be taken under has been filed against EEPL. law including the Insolvency and Bankruptcy Code, 2016 against EEPL, IEDCL, ISPL and . b The Karnataka Electricity Regulatory certain representatives of these entities, Commission has issued an order in 2018 including Jitendra Virwani. EEPL has also pursuant to which banking facilities available written to ISPL in relation to deficiencies in to non-renewable energy certificate based services required to be contractually provided renewable energy generators were reduced by ISPL. ISPL has responded to EEPL denying from a period of one year to six months, and the allegations in such letters. The lenders restrictions were imposed on the extent of of ISPL have also written to EEPL in relation banked energy which could be withdrawn to certain payments made by EEPL to ISPL during the peak time of day. EEPL filed a writ under the deferred payment agreement petition against the Karnataka Electricity dated March 3, 2017. EEPL has responded to Regulatory Commission and others before the lenders stating that they are not party to the High Court of Karnataka. The High Court the arrangements between EEPL and ISPL of Karnataka pursuant to an order dated and should approach ISPL directly. The sub- August 9, 2018 granted an interim stay on contractor has thereafter filed an application the commission’s order. Pursuant to an under Section 9 of the Code before the order dated July 24, 2019, the High Court Bengaluru bench of National Company Law of Karnataka has allowed the writ petition Tribunal claiming debt of `997.59 Million and and quashed the order dated January 09, interest thereon against EEPL. The third party 2018 issued by the Karnataka Electricity sub-contractor vide a letter dated January Regulatory Commission with a direction to 2, 2020 served the notice of hearing in the Karnataka Electricity Regulatory Commission captioned matter for initiation of insolvency to reconsider the matter. No Appeal has been proceedings under Section 9 of the Insolvency filed challenging the said order dated July and Bankruptcy Code, 2016 before the 24, 2019 by virtue of which the Writ Petition NCLT, Bengaluru pursuant to its order dated of EEPL was allowed and the order dated December 16, 2019. The petitioner has filed January 9, 2018 of KERC was quashed. a claim as an operational creditor of IEDCL for an amount of `1,008.10 Million dues to Other Material Litigation the sub-contractor. The matter is in the . a EEPL has received a demand notice under preliminary hearing stage before the NCLT, the Insolvency and Bankruptcy Code, Bengaluru and is pending. 2016 on February 28, 2019 from a third party subcontractor, engaged by IL&FS . b In relation to Embassy Energy, ISPL has Development Company (IEDCL), the parent identified 465.77 acres of land for Embassy company of ISPL, which was itself engaged Energy. The approval obtained by EEPL by ISPL as a contractor for Embassy Energy. from the Government of Karnataka for the The demand notice alleges that unpaid establishment of Embassy Energy requires amounts (categorised as operational debts) that the land is purchased and the solar project aggregating up to `1,008.1 Million are due is established only after obtaining conversion to the sub-contractor directly from EEPL of the use of the land for non-agricultural for the various works claimed to have been purposes. EEPL is required to obtain approval undertaken at the site of Embassy Energy, from the local authorities to purchase the land on the basis of certain correspondence with for the solar project under Section 109 of the EEPL. The demand notice requires payment Karnataka Land Reforms Act, 1961 which is within 10 days of the letter, failing which deemed conversion of agricultural land and the subcontractor may initiate a corporate no further approvals are necessary. EEPL insolvency resolution process against EEPL. directly or through land aggregators has EEPL has by its letter dated March 1, 2019, executed agreements for sale and powers of refuted all such claims inter alia on the basis attorney with various land owners for 465.77 that the payments are due from ISPL (and/ acres of land. Applications for approval under or its parent entity) to the sub-contractor Section 109 have been made for 464.51 acres
70 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 71 STATUTORY DISCLOSURES (CONTD.) as stipulated under Schedule IV read with Regulation 23(4) of SEBI REIT Regulations, 2014
of land and such approvals have been received number CSLR/REV-1/LND2540(236)/BBR-III for 442.20 acres. EEPL has executed sale order/5th floor 2019/3563 has been received deeds in respect of 254.47 acres of land. Of on March 6, 2019 by IENMPL requiring the 254.47 acres of land for which sale deeds payment, within 21 days, of `16.27 Million have been executed, payment of conversion towards regularisation of a prior sub-lease fee is pending. of an erstwhile tenant; and submission by IENMPL, within one month, of details of C.LSP G other transfers and leave and licenses for Regulatory proceedings regularisation. The order also states that due GLSP and its occupier have received a notice in to alleged breaches of terms and conditions, 2017 from the Karnataka State Pollution Control further investigation and necessary action Board stating that the sewage treatment plant at may be taken under section 53 of Maharashtra Embassy Golflinks was inspected by the relevant Land Revenue Act 1966 (which authorises officials and was found to not be operating in the Collector to pass an order for eviction, accordance with the standards stipulated pursuant provided that the company is found to be in to an order passed by the National Green Tribunal breach of the terms of the lease); and that and a public notice issued by the Karnataka IENMPL has the right to prefer an appeal State Pollution Control Board detailing revised before the Maharashtra Revenue Tribunal. standards required to be adopted for such plants IENMPL has paid the aforesaid amount. in 2017. GLSP was called upon to show cause as to why action should not be initiated against it under S ubsequently, IENMPL made an application the Water Act, 1974 and related legislations within to the office of the Collector, Mumbai City, 30 days from the date of the notice. Golflinks seeking conversion of land admeasuring Embassy Business Park Management Services LLP approximately 5,918.11 square meters, on has responded to the notice stating that it is in the which the building known as “Express Towers” process of complying with the observations and stands, from occupancy class II land that is requesting for a period of five to seven months leasehold land into occupancy class I land, for compliance and to grant consent. As per the that is, freehold land, by a letter dated April National Green Tribunal and a public notice issued 1, 2019. Pursuant to various orders passed by by the Karnataka State Pollution Control Board, all the office of the Collector, IENMPL has made the sewage treatment plants in Embassy Golflinks an aggregate payment of approximately have been upgraded as per the National Green `909.46 Million towards regularisation and Tribunal guidelines and to meet the Karnataka conversion of the land. Subsequently, the State Pollution Control Board prescribed Collector, Mumbai pursuant to its order dated new standards. August 23, 2019, after regularising the usage of the said land parcel, approved the conversion GLSP has informed the KSPCB of completion of such land from occupancy class II that is of upgradation works pursuant to a letter dated leasehold land into occupancy class I land September 10, 2020 and requested officials to that is freehold land, under the Maharashtra conduct an inspection, if required. Land Revenue (Conversion of Occupancy Class II and Leasehold Lands into Occupancy D.ENMPL I Class I Lands) Rules, 2019. Certain other matters . a IENMPL has received a notice from the . b S ince the 1970s, many correspondences have Collector, Mumbai in 2008 alleging violations been exchanged by IENMPL, MCGM, and of the terms of the lease deed such as use the Government of Maharashtra, in relation of premises for purposes other than the to unauthorised construction and approval permitted use; carrying out construction/ for change of use of three floors of Express repair work without the approval of the Towers since the execution of the lease state architect; and granting licenses to use deed (including notices relating to alleged to third parties without payment of transfer unauthorised construction and unauthorised charges. IENMPL has responded to this use) IENMPL last applied to the MCGM in1990 notice in 2008 confirming compliance with for such permission which was rejected. the terms of the lease deed. There has been IENMPL thereafter wrote to the Government no further correspondence in this regard of Maharashtra requesting that they direct since 2008. For details of the writ petition the MCGM to regularise the office use and filed by IENMPL in relation to payment of occupation of plaza floors (as per the previous increased transfer charges, see “Material approval of the Government of Maharashtra). litigation and regulatory action pertaining The Government of Maharashtra has observed to the Portfolio” above. An order bearing that the local regulations do not contain a
72 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 73 Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
provision dealing with plaza floors and has offences alleged against Embassy Sponsor and since written to the local authorities in 2004 Jitendra Virwani are under the Indian Penal Code, to formulate guiding principles for treatment 1860, including, inter-alia, Sections 120 (b) & 420. of plaza floors, such amendments are yet to Jitendra Virwani filed a criminal petition in the High be notified. Court of Telangana and Andhra Pradesh seeking an interim order of stay against the proceedings E. EOPPL in the trial court; the High Court has exempted the Other material litigation personal appearance of Jitendra Virwani instead The Embassy Sponsor has received a notice dated of staying the further proceedings. Subsequently, September 18, 2020 from the National Green Embassy Sponsor has filed a criminal petition in Tribunal, Western Zone Bench, Pune stating that a the High Court of Telangana and Andhra Pradesh third party has filed an original application against in 2016 seeking to inter-alia quash the proceedings the Embassy Sponsor, the State Environmental pending before the Special Court for CBI cases Impact Assessment Authority, the Maharashtra at Hyderabad. An interim order of stay has been Pollution Control Board and others, alleging, granted by the High Court in favour of Embassy inter-alia, that construction of certain buildings Sponsor in this regard until the date of the next at Embassy TechZone, Pune was carried out hearing. Embassy Sponsor and Jitendra Virwani illegally from September 2006 to July 2011 since were also named as respondents in proceedings the Embassy Sponsor did not obtain the relevant initiated by the Directorate of Enforcement under environmental clearances from the Environment the Prevention of Money Laundering Act, 2002 in Department, Ministry of Environmental and Forest relation to the same subject matter and an order and Climate Change, Government of India prior to for the provisional attachment of certain movable such period. EOPPL intends to file an application assets of Embassy Sponsor and Jitendra Virwani for impleading itself in the matter. The next hearing was passed in January 2018. The Adjudicating in the matter is scheduled on December 12, 2020. Authority has in June 2018 passed an order to the effect that such alleged assets were not III. Material litigation and regulatory action involved in the money laundering and has revoked pending against Embassy Sponsor the attachment of such assets. The Directorate With respect to Embassy Sponsor, details of all of Enforcement has filed an appeal before the pending regulatory actions and criminal matters Appellate Tribunal at New Delhi and the Appellate against Embassy Sponsor have been disclosed. Tribunal has dismissed the Appeal filed by the For the purpose of pending civil/ commercial Enforcement Directorate and confirmed the orders matters against Embassy Sponsor matters passed by the Adjudicating Authority. Aggrieved exceeding `724.6 Million (being 5% of the total by the Orders passed by the Appellate Tribunal at consolidated revenue for the Financial Year 2020) New Delhi, the Enforcement Directorate has filed have been considered material and proceedings an appeal before the High Court of Telangana at where the amount is not determinable but the Hyderabad and the said Appeal is pending before proceeding is considered material by the Manager the High Court at Hyderabad. from the perspective of Embassy REIT has been disclosed. Other than as disclosed below, there is Regulatory Proceedings no pending criminal litigation, regulatory actions . a The Deputy Commissioner (Registration) or material civil/ commercial matters against and District Registrar, Bengaluru has by Embassy Sponsor as of September 30, 2020. an order passed in 2017 directed Embassy Sponsor to make payment of stamp duty of Criminal Litigation `93.22 Million and registration fee of `16.50 A charge sheet has been filed by the Central Million pertaining to a sale agreement for Bureau of Investigation against various individuals residential properties in Bengaluru. Embassy and the companies including Embassy Realtors Sponsor filed an appeal before the Karnataka Private Limited (which subsequently merged Appellate Tribunal, Bengaluru (“KAT”) in 2018 with Embassy Sponsor) and its founder, Jitendra challenging the order which was dismissed in (Jitu) Virwani in 2014, who have been named as 2019. The KAT directed Embassy Sponsor to accused number 12 and 11 respectively. As part pay an amount of `100.97 Million. Embassy of allegations made against the various others Sponsor has filed a writ petition before the accused, there have also been allegations of High Court of Karnataka challenging the corruption and irregularities in 2004 with relation orders passed by the KAT and High Court has to certain land development and housing projects granted an interim order of stay against the awarded by the Government of Andhra Pradesh order of the KAT. and the Andhra Pradesh Housing Board to a consortium in which, Embassy Realtors Private . b A third party individual has filed an application Limited, was holding a minority stake. The before the National Green Tribunal, Chennai
72 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 73 STATUTORY DISCLOSURES (CONTD.) as stipulated under Schedule IV read with Regulation 23(4) of SEBI REIT Regulations, 2014
in 2015 against the State of Karnataka, and Regulatory Proceedings several other builders including Embassy (a) Concord India Private Limited received a Sponsor, alleging that builders are polluting the notice in 2008 from the Range Forest Officer, Bellandur lake and surrounding environment Bengaluru regarding initiation of proceedings by discharging effluents in the lake, around in the High Court of Karnataka for the which they are developing residential and alleged unauthorised occupation of 78 acres commercial projects. The matter is currently forest land in a plantation reserved forest pending for hearing. in Bengaluru. The company has filed a writ petition in 2008 to quash the notice pursuant . c Embassy Sponsor has received a notice to which the court ordered in 2012 that the from the Competition Commission of India occupied area was not forest land. The Range in 2018 inquiring into its acquisition of over Forest Officer has filed a writ appeal in the 70% of the shareholding of Mac Charles (India) High Court of Karnataka in 2012 against the Limited as a combination. Embassy Sponsor order and the company has also filed a writ has replied to the notice inter alia submitting petition in the High Court of Karnataka in 2012 that the transaction does not constitute a against the State of Karnataka challenging combination within the meaning of Section old notifications of the Karnataka State 5 of the Competition Act, 2002 since Mac Government declaring the occupied area as Charles (India) Limited was eligible to avail an industrial area instead of as a de-reserved the de minimus exemption for combinations reserve forest area for non-forest activity. The under the provisions of the Competition said case has been disposed vide judgment Act, 2002. Embassy Sponsor has replied to dated July 23, 2019. the above notice and has not received any response thereafter. (b) Le Meridien Hotel, Bengaluru (owned by Mac Charles (India) Limited) has received a notice . d The Maharashtra Pollution Control Board in 2013 from the Employees’ Provident Fund pursuant to a notice in 2011 has filed a criminal Organisation to show cause why damages on case in 2012 before the Chief Judicial Magistrate belated remittance should not be levied. The Court, Pune against Embassy Sponsor and hotel agreed to the delay in payment except another accused for violating environmental for certain periods. The Assistant Provident laws by carrying out construction at plot no. Fund Commissioner in 2016 ordered the hotel 3, Rajiv Gandhi Infotech Park, Pune without to pay belated remittance of `0.11 Million obtaining prior clearance. The court issued within stipulated time along with interest summons in 2012, against which Embassy payable. The hotel has filed an appeal in Sponsor has filed a criminal writ petition in the 2016 before the Employees Provident Fund Bombay High Court. Appellate Tribunal, Bengaluru challenging the order and the tribunal granted interim stay. IV. M aterial litigation and regulatory action Further, the provident fund along with the pending against the Associates of Embassy payment of back wages was remitted. Sponsor With respect to the Associates of Embassy (c) J.V. Holdings Private Limited has received a Sponsor, details of all pending regulatory actions notice in 2014 from the RBI to show cause and criminal matters against the Associates why action should not be initiated against it of Embassy Sponsor have been disclosed. for doing business as an NBFC in violation For the purpose of pending civil/commercial of the Reserve Bank of India Act, 1934. The matters against Associates of Embassy Sponsor, company filed its reply to the RBI and the RBI (excluding the Asset SPVs and the Investment in 2016 directed it to either merge with another Entity) matters exceeding 5% of the total NBFC, wind up its business or register as an consolidated revenue of Embassy Sponsor as NBFC. The RBI also directed the Company of March 31, 2020 have been considered material in 2017 to exit partnerships it is invested in and proceedings where the amount is not to qualify as a core investment company. determinable but the proceeding is considered In 2018, the RBI has asked J.V. Holdings material by the Manager from the perspective of Private Limited to submit its response on Embassy REIT has been disclosed. Other than the status of complying with the notice. The as disclosed below, there is no pending criminal company has replied to the RBI stating that litigation, regulatory actions or material civil/ it has commenced provision of marketing commercial matters against the Associates of services and that the proposed income from Embassy Sponsor as of September 30, 2020. such business activity will be such that the company will not be an NBFC by March 31, 2019. The company has ceased undertaking
74 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 75 Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
non-banking financial business as on . d A suit was filed by a third party against March 31, 2019 and has not received any several parties including DSRK for specific further communication in this regard from RBI. performance of alleged oral agreement (for 46.91 acres of land at Sholinganallur). (d) Udhyaman Investments Private Limited has The plaintiff has sought for execution and received a notice in 2015 from the RBI to registration of the sale deeds in its favor. provide clarifications to determine whether it is an NBFC. The company clarified that it . e A suit was filed by a third party in 2007 against does not qualify as an NBFC. The company GV Properties Private Limited and others has not received any further communication before the City Civil Court, alleging that in this regard from RBI. land owned by him admeasuring 5 acres and 11 guntas were alienated to GV Properties (e) Certain oil suppliers supplying oil to the SEZ Private Limited without his knowledge. operated by Vikas Telecom Private Limited have received a demand notice for a sum of . f A suit was filed by a third party against certain `4,309,200 from the Customs Department third parties before the City Civil Court, alleging that they have not obtained SEZ unit Bengaluru seeking a permanent injunction approval for the year 2015 for the DG area of against utilisation of 155,000 square feet of the SEZ and were hence ineligible to claim the land situated at Bengaluru. Swire Properties tax exemption on supply of diesel to the SEZ. Private Limited was impleaded by the plaintiffs The oil suppliers have requested that Vikas in the suit at a later stage alleging that Swire Telecom Private Limited either provide them Properties Private Limited was also infringing with the SEZ unit approval or pay the demand upon the said land parcels. amount. Vikas Telecom Private Limited has filed an appeal before the SEZ Commissioner . g A third party filed a petition before the Indian seeking SEZ unit approval with retrospective Council for Arbitration against Concord India effect from 2015. The SEZ Commissioner has Private Limited for resolution of a dispute in rejected the contention and has provided respect of a memorandum of understanding SEZ unit approval with prospective effect. between the third party and Concord India Vikas Telecom Private Limited has filed a writ Private Limited entered into in 1999 in petition before the High Court of Karnataka respect of joint development of 78 acres of seeking to quash the order passed by the land situated at Kadugodi plantation. The SEZ Commissioner and seeking that the SEZ petitioner has claimed that they are entitled Commissioner be directed to provide the SEZ to develop the land, whereas Concord unit approval with retrospective effect. Vikas India Private Limited has stated that the Telecom Private Limited has obtained an interim petitioner is not entitled to any relief since order granting a stay on the demand notice. the memorandum of understanding was terminated. The arbitral tribunal passed an Other Material Litigation award in favour of Concord India Private a. A suit was filed by third party individuals in Limited dismissing the petition filed by the 2016 against Nam Estates Private Limited, petitioner. Aggrieved by the award passed Udhyaman Investments Private Limited and by the arbitral tribunal, the petitioner filed a others before the Civil Judge, Devanahalli, suit before the City Civil Court at Bengaluru in Bengaluru seeking partition and separate 2019 challenging the said award and the said possession with respect to 1/9th share of a suit is pending for consideration. land parcel admeasuring 120 acres in Bengaluru. V. Material litigation and regulatory action . b A suit was filed by third party individuals in pending against Blackstone Sponsor, its 2016 against Nam Estates Private Limited, and Associates and the Blackstone Sponsor Group others before the Civil Judge, Devanahalli, As of September 30, 2020, Blackstone Sponsor, its Bengaluru seeking partition and separate Associates and Blackstone Sponsor Group do not possession of a land parcel admeasuring 120 have any regulatory actions, criminal matters, or acres in Bengaluru. material civil/commercial litigation, i.e., in excess of USD 6.9 Million (being 5% of the income of the . c A suit was filed by third parties in 2018 against Blackstone Sponsor for the calendar year ended Nam Estates Private Limited and another December 31, 2019) pending against them. before the Principal Civil Judge (Senior Division), Devanahalli, Bengaluru, claiming possession of a land parcel admeasuring 120 acres in Bengaluru.
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VI. Material litigation and regulatory action pending Vii. Material litigation and regulatory action against the Manager and its Associates pending against the trustee As of September 30, 2020, the Manager and its As of September 30 2020, the Trustee does not Associates (to the extent that such Associates have any regulatory actions, criminal matters, or are not Associates of the Sponsors) do not have material civil/commercial litigation, i.e., in excess any regulatory actions, criminal matters, or other of `9.20 Million (being 5% of the income of the material civil/ commercial litigation pending profit after tax of the Trustee for the Financial Year against them. For the purposes of civil/commercial 2020) pending against it. matters against the Manager and its Associates (to the extent that such Associates are not Associates VIII. Taxation Proceedings of the Sponsors), matters involving amounts Details of all direct tax, indirect tax and property exceeding 5% of the revenue of the Manager for the tax matters against the Relevant Parties as of Financial Year 2020 have been considered material. September 30, 2020 are as follows:
Amount involved Nature of case Number of cases (in ` Million) Embassy REIT (Asset SPVs and Investment Entity) Direct Tax 41 425.25 Indirect Tax 15 932.45 Property Tax 2 3,313.08 Embassy Sponsor – EPDPL Direct Tax 5 172.97 Indirect Tax 3 309.63 Property Tax Nil Nil Key Persons (Board of Directors) of the Embassy Sponsor Direct Tax 1 Nil Indirect Tax Nil Nil Property Tax Nil Nil Blackstone Sponsor Direct Tax Nil Nil Indirect Tax Nil Nil Property Tax Nil Nil Key Persons (Board of Directors) of the Blackstone Sponsor Direct Tax Nil Nil Indirect Tax Nil Nil Property Tax Nil Nil Manager – EOPMSPL Direct Tax Nil Nil Indirect Tax Nil Nil Property Tax Nil Nil Blackstone Sponsor Group Direct Tax Nil Nil Indirect Tax Nil Nil Property Tax Nil Nil Associates of the Manager* Direct Tax Nil Nil Indirect Tax Nil Nil Property Tax Nil Nil Associates of the Embassy Sponsor Direct Tax 56 212.17 Indirect Tax 29 971.71 Property Tax Nil Nil Associates of the Blackstone Sponsor# Direct Tax Nil Nil Indirect Tax Nil Nil Property Tax Nil Nil
* Excludes Associates of the Sponsors # Excludes the Blackstone Sponsor Group
76 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 77 Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
15 RISK FACTORS disruption, uncertainty and volatility in the Indian Risk Factors-Embassy Office Parks REIT and global markets, which may adversely affect our ability to access the equity and debt markets, Risk related to our organisation and structure cost of capital and liquidity. 1. The Portfolio has certain liabilities, which liabilities if realised may impact the trading price of the 3. We have a limited operating history and may not units, our profitability and our ability to make be able to operate our business successfully or distributions. generate sufficient cash flows to make or sustain distributions. 2. We have incurred external debt at Embassy REIT level. Additionally, we may incur further debt and 4. A significant portion of our revenues are derived a significant amount of such future debt may from a limited number of large tenants, tenants in be utilised in the operation and development of the technology sector and from a few integrated our business. Consequently, our cash flows and office parks. Any conditions that impact these operating results could be adversely affected by tenants, the technology sector or parks may required repayments or related interest and other adversely affect our business, revenue from risks of our debt financing. Our inability to service operations and financial condition. debt may impact distributions to Unitholders. 5. Tenant leases across our Portfolio are subject to 3. We do not provide any assurance or guarantee the risk of non-renewal, non-replacement or early of any distributions to the Unitholders. We may termination. Further, vacant properties could be not be able to make distributions to Unitholders difficult to lease, which could adversely affect our and the level of distributions may decrease. Our revenues. historical distributions may not be indicative of future distributions. 6. Our business and profitability are dependent on the performance of the commercial real estate 4. The REIT Regulations impose restrictions on the market in India generally and any fluctuations in investments made by us and require us to adhere market conditions may have an adverse impact on to certain investment conditions, which may limit our financial condition. our ability to acquire and/or dispose of assets or explore new opportunities. Further, the regulatory 7. The Independent Auditor’s Report on projections framework governing real estate investment trusts of revenue from operations, net operating income, in India is new and untested. earnings before interest, tax, depreciation and amortisation, cash flow from operating activities 5. The holding and financing structure of the Portfolio and net distributable cash flows (if any) and the may not be tax efficient underlying assumptions contain restrictions with respect to the purpose of the report and, use of Risks Related to our business and industry the report by investors in the United States. 1. Our business is dependent on the Indian economy and financial stability in Indian markets, and any 8. As GLSP does not qualify as an Asset SPV under slowdown in the Indian economy or in Indian the REIT Regulations, it is not required to comply financial markets could have a material adverse with the mandatory distribution requirements effect on our business. under the REIT Regulations.
2. Our business, financial condition, cash flows and 9. The valuation reports obtained for our Portfolio results of operations and the trading price of our are based on various assumptions and may not be units have been and may continue to be adversely indicative of the true value of our assets. impacted by the outbreak of and the resulting disruptions caused by the coronavirus disease 10. We may be required to record significant changes 2019 (COVID-19) pandemic and any government to the earning in the future when we review our action (lockdown etc.).. In the half-year ended Portfolio for potential impairment. September 30, 2020, it has adversely impacted our tenants and our rental income during the month 11. Our contingent liability could adversely affect our of September 2020 and may continue to do so for financial condition, results of operations and cash the next few months. It may adversely impact the flows. ability of our SPVs to pay dividends or service debt payments (including to the REIT) and the ability 12. We rely on third party operators to successfully of the REIT to service debt at its level and may operate and manage certain Portfolio Assets. Our adversely impact our NAV, NDCF and distributions results of operations may be adversely affected to unitholders. The spread of COVID-19 has led to
76 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 77 STATUTORY DISCLOSURES (CONTD.) as stipulated under Schedule IV read with Regulation 23(4) of SEBI REIT Regulations, 2014
if we fail to effectively oversee the functioning of 21. Our solar operations are dependent on the third-party operators regulatory and policy environment affecting the renewable energy sector in India. 13. Compliance with, and changes in, applicable laws (including without limitation environmental 22. Our Asset SPVs and the Investment Entity are laws and regulations) could adversely affect the subject to ongoing compliance requirements development of our properties and our financial under various laws, and there have been certain condition. past instances of non-compliance.
14. If we are unable to maintain relationships with 23. Some of our Portfolio Assets are located on land other stakeholders in our Portfolio, our financial notified as SEZs and the Asset SPVs are required conditions and results of operation may be to comply with the SEZ Act and the rules made adversely affected. thereunder.
15. We may incur losses as a result of unforeseen or 24. The title and development rights or other interests catastrophic events, including the emergence of over land where the Portfolio are located may be pandemics, terrorist attacks, extreme weather subject to legal uncertainties and defects, which events, natural disasters or other widespread may interfere with our ownership of the Portfolio health emergencies that could create economic and result in us incurring costs to remedy and cure and financial disruptions, and could lead to such defects. operational difficulties (including travel limitations) that could impair/impact our ability to manage 25. There can be no assurance that we will be able our businesses. to successfully complete future acquisitions or efficiently manage the assets we have acquired 16. We are exposed to a variety of risks associated or may acquire in the future. Further, any of with safety, security and crisis management. our acquisitions in the future may be subject to acquisition related risks. 17. We may be unable to successfully grow our business in new markets in India, which may 26. There may be conflicts of interests between adversely affect our growth, business prospects, the Manager, Embassy Sponsor, the Blackstone results of operations and financial condition. Sponsor Group, the Blackstone Sponsor, the Trustee and/or their respective associates/ 18. We may be adversely affected if the Asset SPVs affiliates. and Investment Entity are unable to obtain, maintain or renew all regulatory approvals that 27. We may not be able to successfully meet working are required for their respective business. capital or capital expenditure requirements of our Portfolio Assets due to the unavailability of 19. Some of our Portfolio Assets are located / has funding on acceptable terms been historically located on land leased from the Government of Maharashtra, MMRDA, MIDC and 28. We may invest in under construction real estate NOIDA. The relevant Asset SPVs are required to projects which may be adversely affected by delay comply with the terms and conditions provided in completion and cost overruns. in the respective lease agreements with such government bodies, failing which MMRDA, MIDC 29. The audit report of our Statutory Auditors on the or NOIDA, as the case may be, may, impose Consolidated Financial Statements may contain penalties, terminate the lease or take over the certain qualifications and matters of emphasis. premises. 30. Our Portfolio Assets and the Investment Entity 20. We have entered into material related party may be subject to increases in direct expenses transactions, the terms of which may be and other operating expenses. Renovation work, unfavorable to us or could involve conflicts of repair and maintenance or physical damage to interest. The Manager may face conflicts of the Portfolio Assets and / or the assets of the interests in choosing our service providers, and Investment Entity may disrupt our operations and certain service providers may provide services to collection of rental income or otherwise result in the Manager, Embassy Sponsor or the Blackstone an adverse impact on our financial condition and Sponsor Group on more favourable terms than results of operation. those payable by us.
78 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 79 Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
31. We may be subject to certain restrictive covenants Risks related to our relationships with the sponsors under our financing agreements that could limit and the manager our flexibility in managing our business or to use 1. We and parties associated with us are required to cash or other assets. The terms of such financing maintain the eligibility conditions specified under may limit our ability to make distributions to the Regulation 4 of the REIT Regulations as well as Unitholders. the Certificate of Registration on an ongoing basis. We may not be able to ensure such ongoing 32. The Blackstone Sponsor has not entered into a compliance by Embassy Sponsor, the Blackstone deed of right of first offer in respect of any assets Sponsor, the Manager, the Blackstone Sponsor operated by the Blackstone Sponsor Group or Group and the Trustee, which could result in the other entities of the Blackstone Sponsor Group cancellation of our registration. which could lead to potential conflicts of interest. 2. Our Sponsors will be able to exercise significant 33. The ROFO Deed entered into with Embassy influence over certain of our activities and the Sponsor is subject to various terms and conditions. interests of the Sponsors may conflict with the interests of other Unitholders or the interests of 34. The brand “Embassy” is owned by Embassy the Sponsors may conflict with each other. Shelters Private Limited and licensed to us. Our license to use the “Embassy” trademark and logo 3. Conflicts of interest may arise out of common may be terminated under certain circumstances business objectives shared by the Manager, and our ability to use the trademark and logo may Embassy Sponsor, the Blackstone Sponsor, the be impaired. Further, for certain other Asset SPVs, Blackstone Sponsor Group and us. we do not have registered trademarks in the name of the relevant SPVs. 4. Certain principals and employees may be involved in and have a greater financial interest in the 35. We operate in a highly competitive environment performance of other real estate investments, and increased competitive pressure could projects and businesses of Embassy Group or adversely affect our business and the ability of Blackstone and such activities may create conflicts the Manager to execute our growth strategy. of interest in making investment decisions on our behalf. 36. We may not able to maintain adequate insurance to cover all losses we may incur in our business 5. We depend on the Manager and its personnel operations. for our success. We may not find a suitable replacement for the Manager if the Investment 37. There is outstanding litigation and regulatory Management Agreement is terminated or if key actions involving Embassy Sponsor and its personnel cease to be employed by the Manager Associate that may adversely affect our business. or otherwise become unavailable to us.
38. Our business may be adversely affected by the 6. We depend on the Manager to manage our illiquidity of real estate investments business and assets, and our results of operations, financial condition and ability to make distributions 39. Lease deeds with some of our tenants are may be harmed if the Manager fails to perform not adequately stamped or registered, and satisfactorily, for which our recourse may be consequently, we may be unable to successfully limited. litigate over the said agreements in the future and penalties may be imposed on us. Risks related to india 1. Due to the REIT Regulations, it may be difficult 40. Security and IT risks may disrupt our business, for public Unitholders to remove the Trustee as result in losses or limit our growth. Embassy Sponsor and the Blackstone Sponsor Group collectively hold a majority of the Units. 41. Foreign Account Tax Compliance withholding may affect payments on the Units for investors 2. Our performance is linked to the stability of policies and the political situation in India. 42. We expect to be classified as a passive foreign investment company for U.S. federal income tax 3. Any downgrading of India’s sovereign debt rating purposes, which could result in materially adverse by a domestic or international rating agency U.S. federal income tax consequences to U.S. could materially and adversely affect our ability investors in our Units. to obtain financing and, in turn, our business and financial performance.
78 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 79 STATUTORY DISCLOSURES (CONTD.) as stipulated under Schedule IV read with Regulation 23(4) of SEBI REIT Regulations, 2014
4. Significant differences exist between Ind AS and the foreign currency equivalent of the value of the other accounting principles, such as IFRS, Indian Units and any distributions. GAAP and U.S. GAAP which may be material to your assessment of our financial condition, results 4. Unitholders are unable to request for the of operations and cash flows. redemption of their Units.
5. It may not be possible for Unitholders to enforce 5. The Units may experience price and volume foreign judgments. fluctuations and there may not be an active or liquid market for the Units. 6. Tax laws are subject to changes and differing interpretations, which may materially and 6. There can be no assurance on the trading price of adversely affect our operations and growth the Units and the price of the Units may decline. prospects. 7. Any future issuance of Units by us or sale of Units by 7. Investors may be subject to Indian taxes arising Embassy Sponsor, Blackstone Sponsor Group or out of capital gains on the sale of Units. any of other significant Unitholders may materially and adversely affect the trading price of the Units. 8. Land is subject to compulsory acquisition by the The Embassy Sponsor and certain members of the government and compensation in lieu of such Blackstone Sponsor Group have pledged a portion acquisition may be inadequate. of their Units. We cannot assure you that we will not issue further Units or that the Unitholders, 9. We may be subject to the Competition Act, which including the Embassy Sponsor, the Blackstone may require us to receive approvals from the Sponsor Group, and other significant Unitholders, Competition Commission of India (CCI) prior to will not dispose of, pledge or otherwise encumber undertaking certain transactions. their Units.
10. Our ability to raise funding is dependent on our 8. Our rights and the rights of the Unitholders to ability to raise capital through a fresh issue of recover claims against the Manager or the Trustee Units and or our ability to raise debt on acceptable are limited. terms. Further, debt securities issued by us may not qualify as eligible securities that can be held by 9. NAV per Unit may be diluted if further issues are certain types of investors, and certain lenders may priced below the current NAV per Unit. be unable to extend loans to us due to regulatory and other restrictions, which may make it more 10. Compliance with the European Union Directive difficult for us to raise funds and may increase the on Alternative Investment Fund Managers may cost of borrowings. increase administrative and regulatory burdens on the Manager and us. Risks related to the ownership of the units 1. Trusts such as us may be dissolved, and the 16 INFORMATION OF THE CONTACT PERSON proceeds from the dissolution thereof may be less OF THE REIT than the amount invested by the Unitholders. Ms. Deepika Srivastava Company Secretary & Compliance Officer 2. We are subject to ongoing reporting requirements Royal Oaks, Embassy Golflinks Business Park, as a listed entity. These reporting requirements Off Intermediate Ring Road, Bengaluru-560071 and other obligations of real estate investment Ph: T: +9180 3322 2222 F: +9180 3322 2223 trusts post-listing are still evolving. Accordingly, the level of ongoing disclosures made to and Auditor’s report the protections granted to Unitholders may be Please refer to pages 81 and 123-124 of this report. more limited than those made to or available to the shareholders of a company that has listed its equity shares upon a recognised stock exchange in India.
3. Fluctuations in the exchange rate of the Indian Rupee with respect to other currencies will affect
80 Embassy Office Parks REIT / Where the world comes to work Half-Yearly Report 2020-21 PB Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Review report
The Board of Directors Embassy Office Parks Management Services Private Limited (“the Manager”) (Acting in its capacity as the Manager of Embassy Office Parks REIT) 1st Floor, Embassy Point 150, Infantry Road Bengaluru -560001
INTRODUCTION 1. We have reviewed the accompanying unaudited Performed by the Independent Auditor of the condensed standalone interim Ind AS financial Entity” issued by the Institute of Chartered statements of Embassy Office Parks REIT (the Accountants of India. This standard requires “REIT”) which comprise the unaudited condensed that we plan and perform the review to obtain standalone balance sheet as at September 30, moderate assurance as to whether the Condensed 2020, the unaudited condensed statement of Standalone Interim Ind AS Financial Statements profit and loss, including other comprehensive are free of material misstatement. A review income and unaudited condensed statement of consists of making inquiries, primarily of Manager cash flows for the quarter and half year ended personnel responsible for financial and accounting September 30, 2020, the unaudited condensed matters, and applying analytical and other review statement of changes in Unitholders equity for procedures. A review is substantially less in scope the half year ended September 30, 2020 and than an audit conducted in accordance with the Statement of Net Assets at fair value as at Standards on Auditing and consequently does September 30, 2020 and the Statement of Total not enable us to obtain assurance that we would Returns at fair value and the Statement of Net become aware of all significant matters that might Distributable Cash Flows of the REIT for the half be identified in an audit. Accordingly, we do not year ended September 30, 2020 and a summary express an audit opinion. of the significant accounting policies and select explanatory information (together hereinafter CONCLUSION referred to as the “Condensed Standalone Interim 4. Based on our review conducted as above, nothing Ind AS Financial Statements”) being submitted has come to our attention that causes us to believe by the REIT pursuant to the requirements of that the accompanying Condensed Standalone Regulation 23 of the Securities and Exchange Interim Ind AS Financial Statements have not been Board of India (Real Estate Investment Trusts) prepared in all material respects in accordance Regulations, 2014, as amended including any with the requirements of Ind AS 34, as prescribed in guidelines and circulars issued thereunder (“REIT Rule 2(1)(a) of the Companies (Indian Accounting Regulations’’). Standards) Rules, 2015 (as amended) and other accounting principles generally accepted in India. 2. The Condensed Standalone Interim Ind AS Financial Statements are the responsibility of the Manager and has been approved by the Board For S.R. Batliboi & Associates LLP of Directors of the Manager. The Condensed Chartered Accountants Standalone Interim Ind AS Financial Statements ICAI Firm registration number: 101049W/E300004 are prepared in accordance with the requirements of Indian Accounting Standard (Ind AS) 34 “Interim Sd/- Financial Reporting”, as prescribed in Rule 2(1)(a) per Adarsh Ranka of the Companies (Indian Accounting Standards) Partner Rules, 2015 (as amended) and other accounting Membership No.: 209567 principles generally accepted in India, to the UDIN: 20209567AAAAGL3242 extent not inconsistent with the REIT Regulations. Our responsibility is to issue a conclusion on the Place: Bengaluru, India Condensed Standalone Interim Ind AS Financial Date: November 2, 2020 Statements based on our review.
SCOPE OF REVIEW 3. We conducted our review in accordance with the Standard on Review Engagements (SRE) 2410, “Review of Interim Financial Information
Half-Yearly Report 2020-21 81 Condensed standalone balance sheet
(all amounts in ` million unless otherwise stated) As at As at September March 31, 2020 Particulars Note 30, 2020 (Unaudited) (Audited) ASSETS Non-current assets Financial assets - Investments 3 1,86,377.08 1,86,862.18 - Loans 4 68,765.66 65,143.57 Total non-current assets 2,55,142.74 2,52,005.75 Current assets Financial assets - Investments 5 - 3,933.45 - Cash and cash equivalents 6 4,224.94 2,845.45 - Loans 7 1,625.00 620.00 - Other financial assets 8 0.57 3.15 Other current assets 9 33.23 47.42 Total current assets 5,883.74 7,449.47 Total assets 2,61,026.48 2,59,455.22 EQUITY AND LIABILITIES Equity Unit capital 10 2,29,120.96 2,29,120.96 Other equity 11 (16,477.06) (8,784.65) Total equity 2,12,643.90 2,20,336.31 LIABILITIES Non-current liabilities Financial liabilities - Borrowings 12 48,227.50 39,018.84 Total non-current liabilities 48,227.50 39,018.84 Current liabilities Financial liabilities - Trade payables 13 - total outstanding dues of micro and small enterprises - - - total outstanding dues of creditors other than micro and small 10.74 6.68 enterprises - Other financial liabilities 14 132.96 88.48 Other current liabilities 15 3.88 4.37 Current tax liabilities (net) 16 7.50 0.54 Total current liabilities 155.08 100.07 Total equity and liabilities 2,61,026.48 2,59,455.22 Significant accounting policies 2
The accompanying notes referred to above are an integral part of Condensed Standalone Financial Statements.
As per our report of even date attached for S R Batliboi & Associates LLP for and on behalf of the Board of Directors of Chartered Accountants Embassy Office Parks Management Services Private Limited ICAI firm's registration number: 101049W/E300004 (as Manager to the Embassy Office Parks REIT)
Sd/- Sd/- Sd/- Adarsh Ranka Jitendra Virwani Tuhin Parikh Partner Director Director Membership number: 209567 DIN: 00027674 DIN: 00544890 Place: Bengaluru Place: Bengaluru Place: Mumbai Date: November 2, 2020 Date: November 2, 2020 Date: November 2, 2020
82 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Condensed standalone statement of profit and loss
(all amounts in ` million unless otherwise stated)
For the For the For the For the half For the half For the year quarter quarter quarter For the half year ended year ended year ended ended ended ended ended September March September March Particulars Note September June September 30, 2020 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited*) (Unaudited) (Audited) INCOME AND GAINS Dividend 335.00 288.00 112.12 623.00 177.85 112.12 289.97 Interest 17 2,078.55 2,082.63 2,121.99 4,161.18 4,274.90 3,954.11 8,229.01 Other income 18 1.34 4.89 51.88 6.23 93.28 62.06 155.34 Total Income 2,414.89 2,375.52 2,285.99 4,790.41 4,546.03 4,128.29 8,674.32 EXPENSES Valuation expenses 2.22 2.21 2.36 4.43 5.02 4.72 9.74 Audit fees 2.48 2.48 3.30 4.96 4.04 3.60 7.64 Investment management fees 27 54.85 58.61 61.45 113.46 111.36 103.45 214.81 Trustee fees 0.83 0.80 0.74 1.63 1.48 1.48 2.96 Legal and professional fees 14.10 104.29 3.59 118.39 83.36 14.73 98.09 Other expenses 19 11.18 16.95 3.17 28.13 14.98 3.17 18.15 Total Expenses 85.66 185.34 74.61 271.00 220.24 131.15 351.39 Earnings before finance costs, 2,329.23 2,190.18 2,211.38 4,519.41 4,325.79 3,997.14 8,322.93 depreciation, amortisation, impairment loss and tax Finance costs 20 975.22 909.70 696.35 1,884.92 1,685.32 1,165.01 2,850.33 Impairment loss 3 485.10 - - 485.10 587.46 - 587.46 Profit before tax 868.91 1,280.48 1,515.03 2,149.39 2,053.01 2,832.13 4,885.14 Tax expense: 21 Current tax 12.39 13.83 38.96 26.22 27.30 43.87 71.17 12.39 13.83 38.96 26.22 27.30 43.87 71.17 Profit for the period/year 856.52 1,266.65 1,476.07 2,123.17 2,025.71 2,788.26 4,813.97 Items of other comprehensive income Items that will not be reclassified subsequently to profit or loss - Remeasurements of ------defined benefit liability, net of tax Total comprehensive income 856.52 1,266.65 1,476.07 2,123.17 2,025.71 2,788.26 4,813.97 for the period/ year Earning per unit - refer note 22 Basic 1.11 1.64 1.91 2.75 2.63 3.61 6.24 Diluted 1.11 1.64 1.91 2.75 2.63 3.61 6.24 Significant accounting policies 2
* Refer note 31 The accompanying notes referred to above are an integral part of these Condensed Standalone Financial Statements.
As per our report of even date attached for S R Batliboi & Associates LLP for and on behalf of the Board of Directors of Chartered Accountants Embassy Office Parks Management Services Private Limited ICAI firm's registration number: 101049W/E300004 (as Manager to the Embassy Office Parks REIT)
Sd/- Sd/- Sd/- Adarsh Ranka Jitendra Virwani Tuhin Parikh Partner Director Director Membership number: 209567 DIN: 00027674 DIN: 00544890 Place: Bengaluru Place: Bengaluru Place: Mumbai Date: November 2, 2020 Date: November 2, 2020 Date: November 2, 2020
Half-Yearly Report 2020-21 83 Condensed standalone statement of cash flows
(all amounts in ` million unless otherwise stated)
For the For the For the For the For the For the half quarter and For the year quarter quarter quarter half year year ended half year ended ended ended ended ended September ended March Particulars September June September March 30, 2020 September 31, 2020 30, 2020 30, 2020 30, 2019 31, 2020 30, 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited*) (Unaudited) (Audited) Cash flow from operating activities Profit before tax 868.91 1,280.48 1,515.03 2,149.39 2,053.01 2,832.13 4,885.14 Adjustments: Interest income (2,078.55) (2,082.63) (2,121.99) (4,161.18) (4,274.90) (3,954.11) (8,229.01) Net changes in fair value of - - 3.64 - 4.06 (5.78) (1.72) financial assets Dividend (335.00) (288.00) (112.12) (623.00) (177.85) (112.12) (289.97) Gain / (loss) on mutual funds (1.34) (4.89) (55.02) (6.23) (97.34) (55.02) (152.36) Impairment loss 485.10 - - 485.10 587.46 - 587.46 Finance costs 975.22 909.70 696.35 1,884.92 1,685.32 1,165.01 2,850.33 Operating cash flow before (85.66) (185.34) (74.11) (271.00) (220.24) (129.89) (350.13) working capital changes Changes in: Other current assets (7.97) 22.16 (23.68) 14.19 2.70 (50.12) (47.42) Other current and non- 1.54 (2.03) (42.02) (0.49) 4.37 - 4.37 current liabilities and provisions Other current financial (2.55) (7.21) (28.39) (9.76) 23.56 (61.31) (37.75) liabilities Other financial assets 3.35 (0.77) (6.30) 2.58 3.15 (6.30) (3.15) Trade payables 3.06 (5.07) 49.18 (2.01) (42.80) 49.48 6.68 Cash used in operations (88.23) (178.26) (125.32) (266.49) (229.26) (198.14) (427.40) Income taxes paid, net (8.95) (10.31) (47.75) (19.26) (17.12) (53.51) (70.63) Net cash used in operating (97.18) (188.57) (173.07) (285.75) (246.38) (251.65) (498.03) activities Cash flow from investing activities Loans given to subsidiaries (7,456.81) (711.00) (1,890.00) (8,167.81) (9,720.00) (66,565.60) (76,285.60) Loans repaid by 2,255.64 2,194.22 2,906.30 4,449.86 8,710.31 6,886.30 15,596.61 subsidiaries Investment in subsidiary - - - - - (3,450.00) (3,450.00) Investment in debentures - - - - - (2,500.00) (2,500.00) issued by joint venture Redemption of debentures 256.48 467.90 439.10 724.38 906.61 869.01 1,775.62 issued by joint venture Interest received 1,513.27 1,737.78 2,121.31 3,251.05 3,883.92 3,953.43 7,837.35 Dividend received 335.00 288.00 112.12 623.00 177.85 112.12 289.97 Redemption/ (Investments) 1.34 3,213.96 322.01 3,215.30 1,990.63 (5,045.62) (3,054.99) in mutual funds (net) Net cash generated from/ (3,095.08) 7,190.86 4,010.84 4,095.78 5,949.32 (65,740.36) (59,791.04) (used in) investing activities
84 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Condensed standalone statement of cash flows
(all amounts in ` million unless otherwise stated)
For the For the For the For the For the For the half quarter and For the year quarter quarter quarter half year year ended half year ended ended ended ended ended September ended March Particulars September June September March 30, 2020 September 31, 2020 30, 2020 30, 2020 30, 2019 31, 2020 30, 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited*) (Unaudited) (Audited) Cash flow from financing activities Expenses incurred towards - - (63.68) - (51.55) (2,327.09) (2,378.64) Initial Public Offering Proceeds from Issue of 7,414.79 - 74.94 7,414.79 6,453.62 29,714.89 36,168.51 Non-convertible debentures (net of issue expenses) Distribution to unitholders (4,498.44) (5,316.59) (4,166.99) (9,815.03) (9,336.89) (4,166.99) (13,503.88) Security deposits repaid - 1.00 - 1.00 30.00 - 30.00 Interest paid (31.30) - - (31.30) - - - Net cash (used in)/generated 2,885.05 (5,315.59) (4,155.73) (2,430.54) (2,904.82) 23,220.81 20,315.99 from financing activities Net increase/ (decrease) in (307.21) 1,686.70 (317.96) 1,379.49 2,798.12 (42,771.20) (39,973.08) cash and cash equivalents Cash and cash equivalents at 4,532.15 2,845.45 365.29 2,845.45 47.33 42,818.53 42,818.53 the beginning of the period/ year Cash and cash equivalents at 4,224.94 4,532.15 47.33 4,224.94 2,845.45 47.33 2,845.45 the end of the period/ year Cash and cash equivalents comprise: Balances with banks - in current accounts 4,224.13 4,531.71 47.33 4,224.13 2,845.19 47.33 2,845.19 - in escrow accounts 0.81 0.44 - 0.81 0.26 - 0.26 Cash and cash equivalents at 4,224.94 4,532.15 47.33 4,224.94 2,845.45 47.33 2,845.45 the end of the period/ year (refer note 6)
Significant accounting policies (refer note 2) * Refer note 31 The accompanying notes referred to above are an integral part of these Condensed Standalone financial statements. As per our report of even date attached for S R Batliboi & Associates LLP for and on behalf of the Board of Directors of Chartered Accountants Embassy Office Parks Management Services Private Limited ICAI firm’s registration number: 101049W/E300004 (as Manager to the Embassy Office Parks REIT)
Sd/- Sd/- Sd/- Adarsh Ranka Jitendra Virwani Tuhin Parikh Partner Director Director Membership number: 209567 DIN: 00027674 DIN: 00544890 Place: Bengaluru Place: Bengaluru Place: Mumbai Date: November 2, 2020 Date: November 2, 2020 Date: November 2, 2020
Half-Yearly Report 2020-21 85 Condensed standalone statement of changes in unitholders’ equity
(all amounts in ` million unless otherwise stated) A. UNIT CAPITAL Particulars Amount Balance as at April 1, 2019 2,29,039.26 Add: Reversal of issue expenses no longer payable 81.70 Balance as at March 31, 2020 2,29,120.96 Balance as at April 1, 2020 2,29,120.96 Units issued during the period - Balance as at September 30, 2020 2,29,120.96
B. OTHER EQUITY
Retained Particulars Earnings Balance as at April 1, 2019 (94.47) Add : Profit for the year ended March 31, 2020 4,813.97 Less: Distribution to Unitholders for the quarter ended June 30, 2019* (4,166.99) Less: Distribution to Unitholders for the quarter ended September 30, 2019* (4,630.00) Less: Distribution to Unitholders for the quarter ended December 31, 2019* (4,707.16) Balance as at March 31, 2020 (8,784.65) Balance as at April 1, 2020 (8,784.65) Add : Profit for the half year ended September 30, 2020 2,123.17 Less: Distribution to Unitholders for the quarter ended March 31, 2020* (5,316.77) Less: Distribution to Unitholders for the quarter ended June 30, 2020* (4,498.81) Balance as at September 30, 2020 (16,477.06) * The distributions made by Trust to its Unitholders are based on the Net Distributable Cash flows (NDCF) of Embassy Office Parks REIT under the REIT Regulations which includes repayment of loans by SPVs to REIT.
As per our report of even date attached for S R Batliboi & Associates LLP for and on behalf of the Board of Directors of Chartered Accountants Embassy Office Parks Management Services Private Limited ICAI firm’s registration number: 101049W/E300004 (as Manager to the Embassy Office Parks REIT)
Sd/- Sd/- Sd/- Adarsh Ranka Jitendra Virwani Tuhin Parikh Partner Director Director Membership number: 209567 DIN: 00027674 DIN: 00544890 Place: Bengaluru Place: Bengaluru Place: Mumbai Date: November 2, 2020 Date: November 2, 2020 Date: November 2, 2020
86 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report Condensed standalone financial statements disclosure pursuant to SEBI circular No. CIR/IMD/DF/146/2016
(all amounts in ` million unless otherwise stated) A) STATEMENT OF NET ASSETS AT FAIR VALUE
As at As at S.No Particulars Unit of measurement September 30, 2020 March 31, 2020 Book value Fair value Book value Fair value A Assets ` in millions 2,61,026.48 3,25,162.31 2,59,455.22 3,16,939.32 B Liabilities ` in millions 48,382.58 48,382.58 39,118.91 39,118.91 C Net Assets (A-B) ` in millions 2,12,643.90 2,76,779.73 2,20,336.31 2,77,820.41 D No. of units Numbers 77,16,65,343 77,16,65,343 77,16,65,343 77,16,65,343 E NAV (C/D) ` 275.56 358.68 285.53 360.03
Notes 1) Measurement of fair values: The fair value of investments in SPVs are computed basis the fair value of the underlying Investment property, Investment property under development, Property, plant and equipment and capital work- in-progress as at September 30, 2020 and as at March 31, 2020 along with book values of other assets and liabilities accounted in the respective SPV financial statements as at September 30, 2020 and as at March 31, 2020. The fair value of the properties has been determined by independent external property valuers appointed under Regulation 21 of REIT regulations, having appropriately recognised professional qualifications and recent experience in the location and category of the properties being valued.
Valuation technique The fair value measurement for all of the investment property has been categorized as a Level 3 fair value based on the inputs to the valuation technique used.
The valuers have followed a Discounted Cash Flow method. The valuation model considers the present value of net cash flows to be generated from the respective properties, taking into account the expected rental growth rate, vacancy period, occupancy rate, average room rent, lease incentive costs and blended tariff rates. The expected net cash flows are discounted using the risk adjusted discount rates. Among other factors, the discount rate estimation considers the quality of a building and its location (primary vs secondary), tenant credit quality and lease terms.
Given the COVID-19 related uncertainties, the independent valuers have, as a precautionary measure, referenced material valuation uncertainty in arriving at their valuation as at March 31, 2020.
2) Break up of Net asset value as at September 30, 2020 As at As at Particulars September March 31, 2020 30, 2020 Fair value of investments in SPVs 3,20,903.57 3,10,109.83 Add : Other assets 4,258.74 6,829.49 Less : Liabilities (48,382.58) (39,118.91) Net Assets 2,76,779.73 2,77,820.41
3) The Trust holds investment in SPVs which in turn hold the properties. Hence, the breakup of property wise fair values has been disclosed in the Condensed Consolidated financial Statements.
Half-Yearly Report 2020-21 87 Condensed standalone financial statements disclosure pursuant to SEBI circular No. CIR/IMD/DF/146/2016
(all amounts in ` million unless otherwise stated)
B) Statement of Total Returns at fair value For the half For the half For the half year ended year ended S.No Particulars year ended September September March 31, 2020 30, 2020 30, 2019 A Total comprehensive income 2,123.17 2,025.71 2,788.26 B Add : Income of SPV’s and changes in fair value 6,248.59 2,794.34 4,008.99 not recognised in total comprehensive income of Condensed Standalone financial statements C (A+B) Total Return 8,371.76 4,820.05 6,797.25
As per our report of even date attached
for S R Batliboi & Associates LLP for and on behalf of the Board of Directors of Chartered Accountants Embassy Office Parks Management Services Private Limited ICAI firm’s registration number: 101049W/E300004 (as Manager to the Embassy Office Parks REIT)
Sd/- Sd/- Sd/- Adarsh Ranka Jitendra Virwani Tuhin Parikh Partner Director Director Membership number: 209567 DIN: 00027674 DIN: 00544890 Place: Bengaluru Place: Bengaluru Place: Mumbai Date: November 2, 2020 Date: November 2, 2020 Date: November 2, 2020
88 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report Net distributable cash flows (NDCF) pursuant to guidance under paragraph 6 to SEBI circular No. CIR/IMD/DF/146/2016
(all amounts in ` million unless otherwise stated)
For the For the For the For the For the For the half quarter and For the year quarter quarter quarter half year year ended half year ended ended ended ended ended Sl September ended March Particulars September June September March No 30, 2020 September 31, 2020 30, 2020 30, 2020 30, 2019 31, 2020 30, 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited*) (Unaudited) (Audited) 1 Cash flows received from SPVs and investment entity in the form of : • Interest 1,499.05 1,709.81 2,121.29 3,208.86 3,883.35 3,940.58 7,823.93 • Dividends (net of 335.00 288.00 112.12 623.00 177.85 112.12 289.97 applicable taxes) • Repayment of 2,512.12 2,662.12 2,495.40 5,174.24 6,106.92 4,905.31 11,012.23 Shareholder Debt • Proceeds from buy------backs/ capital reduction (net of applicable taxes) 2 Add: Proceeds from sale of - - investments, assets or sale of shares of SPVs adjusted for the following: • Applicable capital gains ------and other taxes • Related debts settled or ------due to be settled from sale proceeds • Directly attributable ------transaction costs • Proceeds reinvested or ------planned to be reinvested as per Regulation 18(16)(d) of the REIT Regulations 3 Add: Proceeds from sale ------of investments, assets or sale of shares of SPVs not distributed pursuant to an earlier plan to re-invest as per Regulation 18(16)(d) of the REIT Regulations, if such proceeds are not intended to be invested subsequently 4 Add: Any other income 15.56 34.58 54.26 50.14 99.19 67.86 167.05 accruing to the Trust and not captured herein 5 Less: Any other expense (15.22) (20.83) (3.17) (36.05) (20.23) (3.17) (23.40) accruing at the Trust level, and not captured herein 6 Less: Any fees, including but not limited to: • Trustee fees (0.83) (0.80) (0.74) (1.63) (1.48) (1.48) (2.96) • REIT Management Fees (54.85) (58.61) (61.45) (113.46) (111.36) (103.45) (214.81) • Valuer fees (2.22) (2.21) (2.36) (4.43) (5.02) (4.72) (9.74) • Legal and professional fees (15.86) (106.07) (5.47) (121.93) (85.98) (16.91) (102.89) • Trademark license fees (0.36) (0.35) (0.71) (0.71) (0.71) (0.71) (1.42) • Secondment fees (0.36) (0.35) (0.71) (0.71) (0.71) (0.71) (1.42)
Half-Yearly Report 2020-21 89 Net distributable cash flows (NDCF) pursuant to guidance under paragraph 6 to SEBI circular No. CIR/IMD/DF/146/2016
(all amounts in ` million unless otherwise stated)
For the For the For the For the For the For the half quarter and For the year quarter quarter quarter half year year ended half year ended ended ended ended ended Sl September ended March Particulars September June September March No 30, 2020 September 31, 2020 30, 2020 30, 2020 30, 2019 31, 2020 30, 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited*) (Unaudited) (Audited) 7 Less: Debt servicing • Interest on external debt (33.99) - - (33.99) - - - • Repayment of external ------debt 8 Less: Income tax (net of (8.95) (10.31) (47.75) (19.26) (17.11) (53.51) (70.62) refund) and other taxes paid (as applicable) Net Distributable Cash 4,229.09 4,494.98 4,660.71 8,724.07 10,024.71 8,841.21 18,865.92 Flows * Refer note 31
Notes:
1. The Board of Directors of the Manager to the Trust, in their meeting held on November 2, 2020, have declared distribution to Unitholders of ` 5.50 per unit which aggregates to ` 4,244.16 million for the quarter ended September 30, 2020. The distributions of ` 5.50 per unit comprises ` 1.90 per unit in the form of interest payment, ` 0.42 per unit in the form of dividend and the balance ` 3.18 per unit in the form of amortization of SPV debt. Along with distribution of ` 5.83 per unit for the quarter ended June 30, 2020, the cumulative distribution for the half year ended September 30, 2020 aggregates to ` 11.33 per unit.
2. Repayment of short-term construction debt given to SPV’s and interest accrued but not due on borrowings as at the period/ year end are not considered for the purpose of distributions.
3. Repayment of external debt, to the extent it is by way of refinancing, is not considered for the purpose of computation of NDCF.
As per our report of even date attached for S R Batliboi & Associates LLP for and on behalf of the Board of Directors of Chartered Accountants Embassy Office Parks Management Services Private Limited ICAI firm’s registration number: 101049W/E300004 (as Manager to the Embassy Office Parks REIT)
Sd/- Sd/- Sd/- Adarsh Ranka Jitendra Virwani Tuhin Parikh Partner Director Director Membership number: 209567 DIN: 00027674 DIN: 00544890 Place: Bengaluru Place: Bengaluru Place: Mumbai Date: November 2, 2020 Date: November 2, 2020 Date: November 2, 2020
90 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
1 TRUST INFORMATION The Trust went public as per its plan for Initial Embassy Property Developments Private Limited Public Offer of Units after obtaining the required (‘EPDPL’) and BRE/Mauritius Investments (‘BMI’) approvals from the relevant authorities. The Units collectively known as (the ‘Sponsors’ or the ‘Co- were allotted to the applicants on March 27, 2019 Sponsors’) have set up the Embassy Office Parks and were subsequently listed on the BSE and NSE REIT (or the “ Embassy REIT” or the “Trust”) on on April 1, 2019. March 30, 2017 at Bengaluru, Karnataka, India as an irrevocable trust under the provisions of Accordingly, the equity interest in each of the below the Indian Trusts Act, 1882 pursuant to a Trust Vehicles (SPVs incorporated in India) (directly or Deed dated March 30, 2017 as amended on indirectly, through their holding companies) have September 11, 2018. The Embassy REIT was been transferred from the respective shareholders registered with SEBI on 3 August 2017 as a real to the Trust. estate investment trust (REIT) under Regulation 6 of the Securities and Exchange Board of India . 1 Embassy Office Parks Private Limited (Real Estate Investment Trusts) Regulations, 2014 (‘EOPPL’) having registration number IN/REIT/17-18/0001. Pursuant to a letter dated August 21, 2018, SEBI . 2 Manyata Promoters Private Limited (‘MPPL’) took on record the addition of the Blackstone Sponsor to the sponsors of the Embassy REIT. . 3 Umbel Properties Private Limited (‘UPPL’) The Trustee to Embassy Office Parks REIT is Axis Trustee Services Limited (the ‘Trustee’) and the . 4 Embassy Energy Private Limited (‘EEPL’) Manager for Embassy Office Parks REIT is Embassy Office Parks Management Services Private Limited . 5 Earnest Towers Private Limited (‘ETPL’) (the ‘Manager’ or ‘EOPMSPL’). . 6 Indian Express Newspapers (Mumbai) Private The objectives of Embassy REIT are to undertake Limited (‘IENMPL’) activities in accordance with the provisions of the SEBI REIT Regulations and the Trust Deed. The . 7 Vikhroli Corporate Park Private Limited principal activity of Embassy REIT is to own and (‘VCPPL’) invest in rent or income generating real estate and related assets in India with the objective of . 8 Qubix Business Park Private Limited (‘QBPPL’) producing stable and sustainable distributions to Unitholders. . 9 Quadron Business Park Private Limited (‘QBPL’) Embassy Office Parks REIT acquired the SPVs by acquiring all the equity interest held by the 10. Oxygen Business Park Private Limited Embassy Sponsor, Blackstone Sponsor and (‘OBPPL’) Blackstone Sponsor Group and certain other shareholders on March 22, 2019. In exchange for 11. Galaxy Square Private Limited (‘GSPL’) these equity interests, the above shareholders have been allotted 613,332,143 Units of Embassy Office Parks REIT valued at ` 300 each. These Units were subsequently listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on April 1, 2019.
Half-Yearly Report 2020-21 91 Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
Details of SPV’s are provided below.
Name of the SPV Activities Shareholding (in percentage) EOPPL Development and leasing of office space and related interiors Embassy Office Parks REIT: 100% (Embassy Tech Zone), located at Pune along with being an intermediate Embassy Office Parks investment company for the Embassy Office Parks REIT. MPPL Development and leasing of office space and related interiors EOPPL: 35.77% (Manyata Embassy Business Park), located at Bangalore. Embassy Office Parks REIT: 64.23% UPPL Development, rental and maintenance of serviced residences Embassy Office Parks REIT: 100% (Hilton residences) located at Bangalore. EEPL Generation and supply of solar power to the office spaces of SPVs Embassy Office Parks REIT: 20% of the Embassy Office Parks REIT located in Bangalore. EOPPL: 80% GSPL Development and leasing of office space and related interiors and Embassy Office Parks REIT: 100% maintenance of such assets (Galaxy Business Park), located in Noida. QBPL Development and leasing of office space and related interiors and Embassy Office Parks REIT: 100% maintenance of such assets (Quadron Business Park), located in Pune and (Embassy one) located in Bangalore Development, rental and maintenance of serviced residences (Hotel Four Seasons at Embassy One), located in Bangalore ETPL Development and leasing of office space and related interiors and Embassy Office Parks REIT: 100% maintenance of such assets (First International Financial Centre), located in Mumbai. QBPPL Development and leasing of office space and related interiors Embassy Office Parks REIT: 100% and maintenance of such assets (Qubix Business Park), located in Pune. OBPPL Development and leasing of office space and related interiors and Embassy Office Parks REIT: 100% maintenance of such assets (The Oxygen Park), located in Noida. VCPPL Development and leasing of office space and related interiors and Embassy Office Parks REIT: 100% maintenance of such assets (247 Park), located in Mumbai. IENMPL Development and leasing of office space and related interiors and Embassy Office Parks REIT: 100% maintenance of such assets (Express Towers Building), located in Mumbai.
The Trust, further has the following subsidiary incorporated/ acquired post IPO :
Name of the Activities Shareholding (in percentage SPV EPTPL Development and leasing of office space and related interiors, EOPPL : 100% located in Pune.
The Trust also holds economic interest in a joint venture (Golflinks Software Park Private Limited (GLSP), entity incorporated in India) through a SPV as detailed below.
Name of the Activities Shareholding (in percentage) SPV GLSP Development and leasing of office space and related interiors Embassy Office Parks Private (Embassy Golflinks Business Park), located at Bangalore Limited (50%) Kelachandra Holdings LLP (50%)
92 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
2 SIGNIFICANT ACCOUNTING POLICIES Rules, 2015 (as amended), to the extent not 2.1 Basis of preparation of Condensed Standalone inconsistent with REIT regulations. Financial statements The Interim Condensed Standalone Financial The Trust has followed the same accounting Statements (‘Condensed Standalone Financial policies in preparation of the Condensed statements’) of the Trust comprises the Standalone Standalone Financial Statements as those followed Balance Sheet and the Statement of Net Assets at in preparation of the Annual Standalone Financial fair value as at September 30, 2020, the Standalone Statements as at and for the year ended March Statement of Profit and Loss, including other 31, 2020. These Condensed Standalone Financial comprehensive income, the Standalone Statement Statements should be read in conjunction with the of Cash Flow, the Statement of Net Distributable Audited Standalone Financial Statements and the Cashflows for the quarter and half year ended related notes for the year ended March 31, 2020. September 30, 2020, the Standalone Statement of Changes in Unitholder’s Equity, the Statement 2.2 Summary of significant accounting policies of Total Returns at fair value and a summary a) Functional and presentation currency of significant accounting policies and select The Condensed Standalone Financial Statements explanatory information for the half year ended are presented in Indian Rupees, which is the September 30, 2020. The Condensed Standalone Embassy Office Parks REIT’s functional currency Financial Statements were approved for issue in and the currency of the primary economic accordance with resolution passed by the Board environment in which the Embassy Office Parks of Directors of the Manager on behalf of the Trust REIT operates. All financial information presented on November 2, 2020. in Indian Rupees has been rounded off to nearest million except unit and per unit data. The Condensed Standalone Financial Statements have been prepared in accordance with the b) Basis of measurement requirements of SEBI (Real Estate Investment The Condensed Standalone Financial Statements Trusts) Regulations, 2014 as amended from time to are prepared on the historical cost basis, except time including any guidelines and circulars issued for the following: there under read with SEBI Circular No. CIR/IMD/ DF/146/2016 dated December 29, 2016 (the “REIT - Certain financial assets and liabilities (refer regulations’); Indian Accounting Standard (Ind AS) accounting policy regarding financial 34 “Interim Financial Reporting”, as prescribed in instrument): measured at fair values. Rule 2(1)(a) of the Companies (Indian Accounting Standards) Rules, 2015 (as amended) and other c) Use of judgments and estimates accounting principles generally accepted in The preparation of Condensed Standalone India, to the extent not inconsistent with the REIT Financial Statements in conformity with generally regulations. Also refer Note 10(a) on classification accepted accounting principles in India (Ind AS) of Unitholders fund. requires management to make estimates and assumptions that affect the reported amounts of Embassy Office Parks REIT has prepared assets, liabilities, income and expenses. Actual Condensed Standalone financial statements results could differ from those estimates. which comply with Ind AS applicable for period ending on September 30, 2020, together with Estimates and underlying assumptions are the comparative period data as at and for the reviewed on a periodic basis. Revisions to year ended March 31, 2020, as described in the accounting estimates are recognised in the period summary of significant accounting policies. in which the estimates are revised and in any future periods affected. The Condensed Standalone financial statements are presented in Indian Rupees in Millions, except Information about critical judgements in when otherwise indicated. applying accounting policies that have the most significant effect on the amounts recognised in Statement of compliance to Ind-AS the Condensed Standalone Financial Statements These Condensed Standalone Financial Statements is included in the following notes: for the period ended September 30, 2020 are the financial statements of the Embassy Office Parks ) i Classification of lease arrangements as REIT and have been prepared in accordance with finance lease or operating lease – Note 2.2 (m) Indian Accounting Standards (Ind AS) 34 “Interim Financial Reporting” as prescribed in Rule 2(1)(a) ii) Classification of Unitholders’ funds – Note 10 (a) of the Companies (Indian Accounting Standards)
Half-Yearly Report 2020-21 93 Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
Information about assumptions and estimation d) Current versus non-current classification uncertainties that have a significant risk resulting The Embassy Office Parks REIT presents assets in a material adjustment are included in the and liabilities in the Condensed Standalone following notes - Balance Sheet based on current/ non-current classification: ) i Valuation of financial instruments – Refer Note 2.2 (h) An asset is treated as current when it is:
ii) R ecognition of deferred tax asset on carried • Expected to be realised or intended to be sold forward losses and recognition of minimum or consumed in normal operating cycle; alternate tax credit: availability of future • Held primarily for the purpose of trading; taxable profit against which tax losses carried forward can be used- Note 2.2(q)(ii) • Expected to be realised within twelve months after the reporting period; or iii) Estimation of uncertainties relating to the • Cash or cash equivalent unless restricted from global health pandemic from COVID-19 being exchanged or used to settle a liability The Trust has considered the possible effects for at least twelve months after the reporting that may result from the pandemic relating period. to COVID-19 on the carrying amounts of its investments in SPVs including loans and other All other assets are classified as non-current. receivables. In developing the assumptions relating to the possible future uncertainties A liability is current when: in the global economic conditions because of this pandemic, the Trust, as at the date • It is expected to be settled in normal operating of approval of these financial statements cycle; has used internal and external sources of information including reports from • It is held primarily for the purpose of trading; International Property Consultants and • It is due to be settled within twelve months related information, economic forecasts and after the reporting period; or consensus estimates from market sources on the expected future performance of the • There is no unconditional right to defer the Trust. The Trust has performed sensitivity settlement of the liability for at least twelve analysis on the assumptions used and based months after the reporting period. on current estimates expects the carrying amount of these assets as reflected in the The Embassy Office Parks REIT classifies all other balance sheet as at September 30, 2020 will liabilities as non-current. be recovered. The impact of COVID-19 on the Trust’s financial statements may differ from Deferred tax assets and liabilities are classified as that estimated as at the date of approval non-current assets and liabilities. of these Condensed Standalone financial statements. The operating cycle is the time between the acquisition of assets for processing and their iv) Impairment of investments and loans in realisation in cash and cash equivalents. The subsidiaries Embassy Office Parks REIT has identified twelve months as its operating cycle. I mpairment exists when the carrying value of an asset or cash generating unit exceeds e) Measurement of fair values its recoverable amount, which is the higher A number of the Embassy Office Parks REIT of its fair value less costs of disposal and its accounting policies and disclosures require the value in use. The recoverable amounts for the measurement of fair values, for both financial and investments in subsidiaries are based on value non-financial assets and liabilities. Fair value is the in use of the underlying properties. The value price that would be received to sell an asset or in use calculation is based on discounted paid to transfer a liability in an orderly transaction cash flow model. The key assumptions used between market participants at the measurement to determine the recoverable amount are date. The fair value measurement is based on the disclosed and further explained in Note 3.
94 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
presumption that the transaction to sell the asset • Level 3: inputs for the asset or liability that or transfer the liability takes place either: are not based on observable market data (unobservable inputs). • In the principal market for the asset or liability; or When measuring the fair value of an asset or a liability, the Embassy Office Parks REIT uses • In the absence of a principal market, in the observable market data as far as possible. If the most advantageous market for the asset or inputs used to measure the fair value of an asset liability. or a liability fall into different levels of the fair value hierarchy, then the fair value measurement The principal or the most advantageous market is categorised in its entirety in the same level of must be accessible by the Embassy Office Parks the fair value hierarchy as the lowest level input REIT. The fair value of an asset or a liability is that is significant to the entire measurement. The measured using the assumptions that market REIT recognises transfers between levels of the participants would use when pricing the asset or fair value hierarchy at the end of the reporting liability, assuming that market participants act in period during which the change has occurred. their economic best interest. f) Impairment of non-financial assets A fair value measurement of a non-financial asset The Embassy Office Parks REIT assesses, at each takes into account a market participant’s ability to reporting date, whether there is an indication generate economic benefits by using the asset in that a non-financial asset other than inventories its highest and best use or by selling it to another and deferred tax assets may be impaired. If any market participant that would use the asset in its indication exists, or when annual impairment highest and best use. testing for an asset is required, the Embassy Office Parks REIT estimates the asset’s recoverable The Embassy Office Parks REIT uses valuation amount. techniques that are appropriate in the circumstances and for which sufficient data are An impairment loss is recognised in the Standalone available to measure fair value, maximising the use Statement of Profit and Loss if the carrying of relevant observable inputs and minimising the amount of an asset or its cash-generating unit use of unobservable inputs. (CGU) exceeds its recoverable unit. Impairment loss recognised in respect of a CGU is allocated The Embassy Office Parks REIT has an first to reduce the carrying amount of any established control framework with respect to goodwill allocated to the CGU, and then to reduce the measurement of fair values. The Embassy the carrying amounts of the other assets of the Office Parks REIT engages with external valuers CGU on a pro rata basis. A CGU is the smallest for measurement of fair values in the absence of identifiable asset REIT that generates cash flows quoted prices in active markets. that are largely independent from other assets and REITs. Impairment losses are recognised in The Embassy Office Parks REIT has an established the Standalone Statement of Profit and Loss, control framework with respect to the measurement of unless it reverses previous revaluation credited to fair values. The Embassy Office Parks REIT engages equity, in which case it is charged to equity. with external valuers for measurement of fair values in the absence of quoted prices in active markets. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal While measuring the fair value of an asset or and its value in use. In assessing value in use, the liability, the Embassy Office Parks REIT uses estimated future cash flows are discounted to their market observable data as far as possible. Fair present value using a pre-tax discount rate that values are categorised into different levels in a reflects current market assessments of the time fair value hierarchy based on inputs used in the value of money and the risks specific to the asset. valuation techniques as follows- In determining fair value less costs of disposal, recent market transactions are taken into account. • Level 1: Quoted prices (unadjusted) in active For the purpose of impairment testing, assets markets for identical assets or liabilities. that cannot be tested individually are grouped • Level 2: Inputs other than quoted prices together into the smallest group of assets that included in Level 1 that are observable for the generates cash inflows from continuing use that asset or liability, either directly (i.e. as prices) are largely independent of the cash inflows of other or indirectly (i.e. derived from prices). assets or CGU.
Half-Yearly Report 2020-21 95 Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
Impairment losses recognised in prior periods are • Fair value through other comprehensive assessed at each reporting date for any indications income (FVOCI)– equity instrument; or that the loss has decreased or no longer exists. • Fair value through profit or loss (FVTPL) An impairment loss is reversed if there has been a change in the estimates used to determine Financial assets are not reclassified subsequent the recoverable amount. An impairment loss in to their initial recognition, except if and in the respect of goodwill is not subsequently reversed. period the Embassy Office Parks REIT changes In respect of other assets, such a reversal is made its business model for managing financial assets. only to the extent that the asset’s carrying amount does not exceed the carrying amount that would A financial asset is measured at amortised cost if it have been determined, net of depreciation, if no meets both of the following conditions and is not impairment loss had been recognised. designated as FVTPL: g) Foreign currency transactions • the asset is held within a business model Transactions in foreign currencies are translated whose objective is to hold assets to collect into the respective functional currencies of contractual cash flows; and Embassy Office Parks REIT’s entities at the exchange rates at the dates of the transactions. • the contractual terms of the financial asset give rise on specified dates to cash flows that are Monetary assets and liabilities denominated in solely payments of the principal and interest foreign currencies are translated into the functional on the principal amount outstanding. currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that A debt investment is measured at FVOCI if it are measured at fair value in a foreign currency meets both of the following conditions and is not are translated into the functional currency at the designated as FVTPL: exchange rate when the fair value was determined. Non-monetary assets and liabilities that are • the asset is held within a business model measured based on historical cost in a foreign whose objective is achieved by both collecting currency are translated at the exchange rate at contractual cash flows and selling financial the date of the transaction. assets; and • the contractual terms of the financial asset give Exchange differences arising on foreign exchange rise on specified dates to cash flows that are transactions settled and from translations during solely payments of the principal and interest the year are recognised in the Standalone on the principal amount outstanding. Statement of Profit and Loss of the year except exchange differences arising from the translation On initial recognition of an equity instrument that is of the items which are recognised in OCI. not held for trading, the Embassy Office Parks REIT may irrevocably elect to present subsequent changes h) Financial instruments in the investment’s fair value in OCI (designated as i) Recognition and initial measurement FVOCI – equity investment). This election is made on Trade receivables and debt securities issued are an investment by investment basis. initially recognised when they are originated. All other financial assets and financial liabilities are All financial assets not classified as measured at initially recognised when the Embassy Office amortised cost or FVOCI as described above are Parks REIT becomes a party to the contractual measured at FVTPL. This includes all derivative provisions of the instrument. financial assets. On initial recognition, the Embassy Office Parks REIT may irrevocably A financial asset or financial liability is initially designate a financial asset that otherwise meets measured at fair value plus, for an item not at fair the requirements to be measured at amortised value through profit or loss (FVTPL), transaction cost or at FVOCI or at FVTPL if doing so eliminates costs that are directly attributable to its acquisition or significantly reduces an accounting mismatch or issue. that would otherwise arise. ii) Classification and subsequent measurement Financial assets: Business model assessment Financial assets The Embassy Office Parks REIT makes an On initial recognition, a financial asset is classified assessment of the objective of the business model as measured at in which a financial asset is held at a portfolio level because this best reflects the way the • Amortised cost; business is managed and information is provided • Fair value through other comprehensive income (FVOCI)– debt instrument;
96 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
to the Management. The information considered the Embassy Office Parks REIT considers the includes: contractual terms of the instrument. This includes assessing whether the financial asset contains a • the stated policies and objectives for contractual term that could change the timing the portfolio and the operation of those or amount of contractual cash flows such that policies in practice. These include whether it would not meet this condition. In making this Management’s strategy focuses on earning assessment, the Embassy Office Parks REIT contractual interest income, maintaining a considers: particular interest rate profile, matching the duration of the financial assets to the duration • contingent events that would change the of any related liabilities or expected cash amount or timing of cash flows; outflows or realising cash flows through the • terms that may adjust the contractual coupon sale of the assets; rate, including variable interest rate features; • how the performance of the portfolio is • prepayment and extension features; and evaluated and reported to the Embassy Office Parks REIT’s Management; • terms that limit the Embassy Office Parks REIT’s claim to cash flows from specified • the risks that affect the performance of the assets (e.g. non – recourse features) business model (and the financial assets held within that business model) and how those A prepayment feature is consistent with the solely risks are managed; payment of principal and interest criterion if the • how managers of the business are prepayment amount substantially represents compensated – e.g. whether compensation is unpaid amounts of principal and interest on the based on the fair value of the assets managed principal amount outstanding, which may include or the contractual cash flows collected; and reasonable additional compensation for early termination of the contract. Additionally, for a • the frequency, volume and timing of sales of financial asset acquired at a significant discount or financial assets in prior periods, the reasons premium to its contractual par amount, a feature for such sales and expectations about future that permits or requires prepayment at an amount sales activity. that substantially represents the contractual par amount plus accrued (but unpaid) contractual Transfers of financial assets to third parties in interest (which may also include reasonable transactions that do not qualify for derecognition additional compensation for early termination) is are not considered sales for this purpose, treated as consistent with this criterion if the fair consistent with the Embassy Office Parks REIT’s value of the prepayment feature is insignificant at continuing recognition of the assets. initial recognition. Financial assets that are held for trading or are Financial assets: Subsequent measurement and managed and whose performance is evaluated on a fair value basis are measured at FVTPL. gains and losses Financial assets These assets are subsequently Financial assets: Assessment whether at FVTPL measured at fair value. Net gains contractual cash flows are solely payments of and losses, including any interest or principal and interest dividend income, are recognised in For the purpose of this assessment, ‘principal’ profit or loss. is defined as the fair value of the financial asset Financial assets at These assets are subsequently on initial recognition. ‘Interest’ is defined as amortised cost measured at amortised cost using consideration for the time value of money and the effective interest method. for the credit risk associated with the principal The amortised cost is reduced by amount outstanding during a particular period of impairment losses. Interest income, time and for other basic lending risks and costs foreign exchange gains and losses (e.g. liquidity risk and administrative costs), as well and impairment are recognised in as a profit margin. profit or loss. Any gain or loss on derecognition is recognised in profit In assessing whether the contractual cash flows or loss. are solely payments of principal and interest,
Half-Yearly Report 2020-21 97 Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
Debt instruments These assets are subsequently Financial liabilities at FVOCI measured at fair value. Interest The Embassy Office Parks REIT derecognises a income under the effective interest financial liability when its contractual obligations method, foreign exchange gains are discharged or cancelled, or expired. and losses and impairment are recognised in profit or loss. Other The Embassy Office Parks REIT also derecognises net gains and losses are recognised a financial liability when its terms are modified in OCI. On derecognition, gains and losses accumulated in OCI are and the cash flows under the modified terms are reclassified to profit or loss. substantially different. In this case, a new financial Equity instruments These assets are subsequently liability based on the modified terms is recognised at FVOCI measured at fair value. Dividends at fair value. The difference between the carrying are recognised as income in profit amount of the financial liability extinguished and or loss unless the dividend clearly the new financial liability with modified terms is represents a recovery of part of the recognised in profit and loss. cost of the investment. Other net gains and losses are recognised iv) Offsetting in OCI and are not reclassified to Financial assets and financial liabilities are offset profit or loss. and the net amount presented in the Standalone Balance Sheet when, and only when, the Embassy Financial liabilities: Classification, subsequent Office Parks REIT currently has a legally enforceable measurement and gains and losses right to set off the amounts and it intends either Financial liabilities are classified as measured at to settle them on a net basis or to realise the asset amortised cost or FVTPL. A financial liability is and settle the liability simultaneously. classified as at FVTPL if it is classified as held for trading, or it is a derivative or it is designated i) Compound financial instruments as such on initial recognition. Financial liabilities The liability component of a compound financial at FVTPL are measured at fair value and net instrument is initially recognised at the fair value gains and losses, including any interest expense, of a similar liability that does not have an equity are recognised in profit or loss. Other financial conversion option. The equity component is liabilities are subsequently measured at amortised initially recognised at the difference between the cost using the effective interest method. Interest fair value of the compound financial instrument expense and foreign exchange gains and losses as a whole and the fair value of the liability are recognised in profit and loss. Any gain or component. Any directly attributable transaction loss on derecognition is also recognised in profit costs are allocated to the liability and equity and loss. components in proportion to their initial carrying amounts. iii) Derecognition Financial assets Subsequent to initial recognition, the liability The Embassy Office Parks REIT derecognises component of a compound financial instrument a financial asset when the contractual rights to is measured at amortised cost using the effective the cash flows from the financial asset expire, or interest method. The equity component of a it transfers the rights to receive the contractual compound financial instrument is not measured cash flows in a transaction in which substantially subsequently. all of the risks and rewards of ownership of the financial asset are transferred or in which the Interest related to the financial liability is Embassy Office Parks REIT neither transfers nor recognised in profit or loss (unless it qualifies for retains substantially all of the risks and rewards inclusion in cost of asset). In case of conversion of ownership and does not retain control of the at maturity, the financial liability is reclassified to financial asset. equity and no gain or loss is recognised.
If the Embassy Office Parks REIT enters into j) Impairment of financial assets transactions whereby it transfers assets recognised Financial assets in its Standalone Balance Sheet but retains either The Embassy Office Parks REIT recognises loss all or substantially all of the risks and rewards of allowances for expected credit losses on: the transferred assets, the transferred assets are not derecognised. • financial assets measured at amortised cost; and • financial assets measured at FVTOCI- debt investments
98 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
At each reporting date, the Embassy Office Parks When determining whether the credit risk of a REIT assesses whether financial assets carried financial asset has increased significantly since at amortised cost and debt securities at FVTOCI initial recognition and when estimating expected are credit-impaired. A financial asset is ‘credit- credit losses, the Embassy Office Parks REIT impaired’ when one or more events that have a considers reasonable and supportable information detrimental impact on the estimated future cash that is relevant and available without undue cost flows of the financial asset have occurred. or effort. This includes both quantitative and qualitative information and analysis, based on the Evidence that a financial asset is credit-impaired Embassy Office Parks REIT’s historical experience includes the following observable data: and informed credit assessment and including forward-looking information. • significant financial difficulty of the borrower or issuer The Embassy Office Parks REIT assumes that the credit risk on a financial asset has increased • a breach of contract such as a default or being significantly if it is more than 30 days past due. past due for 180 days or more • the restruc++turing of a loan or advance by the The Embassy Office Parks REIT considers a Embassy Office Parks REIT on terms that the financial asset to be default when: Embassy Office Parks REIT would not consider otherwise • the borrower is unlikely to pay its credit obligations to the Embassy Office Parks REIT • it is probable that the borrower will enter in full, without recourse by the Embassy Office bankruptcy or other financial reorganisation or Parks REIT to actions such as realising security • the disappearance of an active market for a (if any is held); or security because of financial difficulties • the financial asset is 180 days or more past due without any security The Embassy Office Parks REIT measures loss allowances at an amount equal to lifetime expected : Expected credit losses, except for the following, which are Measurement of expected credit losses credit losses are a probability-weighted estimate measured as 12 month expected credit losses: of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the • debt securities that are determined to have difference between the cash flows due to the low credit risk at the reporting date; and Embassy Office Parks REIT and the cash flows • other debt securities and bank balances that the Embassy Office Parks REIT expects for which credit risk (i.e. the risk of default to receive). occurring over the expected life of the financial instrument) has not increased significantly Presentation of allowance for expected credit since initial recognition. losses in the balance sheet: Loss allowances for financial assets measured at amortised cost are Loss allowances for trade receivables are always deducted from the gross carrying amount of the measured at an amount equal to lifetime expected assets. For debt securities at FVTOCI, the loss credit losses. allowance is charged to profit and loss account and is recognised in OCI. Lifetime expected credit losses are the expected credit losses that result from all possible default Write-off: The gross carrying amount of a events over the expected life of a financial financial asset is written off (either partially or instrument. in full) to the extent that there is no realistic prospect of recovery. This is generally the case 12-month expected credit losses are the portion when the Embassy Office Parks REIT determines of expected credit losses that result from default that the debtor does not have assets or sources events that are possible within 12 months after the of income that could generate sufficient cash reporting date (or a shorter period if the expected flows to repay the amounts subject to write-off. life of the instrument is less than 12 months). However, financial assets that are written off could still be subject to enforcement activities in order In all cases, the maximum period considered when to comply with the Embassy Office Parks REIT’s estimating expected credit losses is the maximum procedures for recovery of amounts due. contractual period over which the Embassy Office Parks REIT is exposed to credit risk.
Half-Yearly Report 2020-21 99 Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
Majority of the financial assets of the Embassy amount of the initial measurement of the lease Office Parks REIT pertains to loans to subsidiaries liability, adjusted for any lease payments made and other receivables. Considering the nature of at or before the commencement date, less any business, the Embassy Office Parks REIT does lease incentives received, plus any initial direct not foresee any credit risk on its loans and other costs incurred and an estimate of the costs to be receivables which may cause an impairment. Also, incurred by the lessee in dismantling and removing Embassy Office Parks REIT does not have any past the underlying asset or restoring the underlying history of significant impairment of loans and asset or site on which it is located. other receivables. The right-of-use assets is subsequently measured at k) Embedded derivatives cost less accumulated depreciation, accumulated When the Embassy Office Parks REIT becomes a impairment losses, if any and adjusted for any party to a hybrid contract with a host that is not remeasurement of the lease liability. The right- an asset within the scope of Ind AS 109 Financial of-use assets are depreciated using the straight- Instruments, it identifies whether there is an line method from the commencement date over embedded derivative. Embedded derivatives are the shorter of lease term or useful life of right- separated from the host contract and accounted of-use asset. Right-of-use assets are tested for for separately if the host contract is not a financial impairment whenever there is any indication that asset and certain criteria are met. their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the l) Financial guarantee contracts statement of profit and loss. Financial guarantee contracts are recognised as a financial liability at the time the guarantee The lease liability is initially measured at the is issued. The liability is initially measured at present value of the lease payments that are not fair value and subsequently at the higher of the paid at the commencement date, discounted using amount determined in accordance with Ind AS 37 the interest rate implicit in the lease or, if that rate Provisions, Contingent Liabilities and Contingent cannot be readily determined, the incremental Assets and the amount initially recognised less borrowing rate applicable to the entity within cumulative amortisation, where appropriate. the Embassy Office Parks REIT. Generally, the Embassy Office Parks REIT uses its incremental The fair value of financial guarantees is determined borrowing rate as the discount rate. For leases with as the present value of the difference in net cash reasonably similar characteristics, the Embassy flows between the contractual payments under the Office Parks REIT, on a lease by lease basis, may debt instrument and the payments that would be adopt either the incremental borrowing rate required without the guarantee, or the estimated specific to the lease or the incremental borrowing amount that would be payable to a third party for rate for the portfolio as a whole. assuming the obligations. The Embassy Office Parks REIT recognises the When guarantees in relation to loans or other amount of the re-measurement of lease liability payables of subsidiaries or associates are provided as an adjustment to the right-of-use asset. Where for no compensation, the fair values are accounted the carrying amount of the right-of-use asset is as contributions and recognised as part of the cost reduced to zero and there is a further reduction in of investment. the measurement of the lease liability, the Embassy Office Parks REIT recognises any remaining m) Leases amount of the re-measurement in statement of Embassy Office Parks REIT as a lessee profit and loss. A contract is, or contains, a lease if the contract conveys the right to control the use of an The Embassy Office Parks REIT has elected not to identified asset for a period of time in exchange recognise right-of-use assets and lease liabilities for consideration. for short-term leases of all assets that have a lease term of 12 months or less and leases of low-value The Embassy Office Parks REIT recognises right- assets. The Embassy Office Parks REIT recognizes of-use asset representing its right to use the the lease payments associated with these leases underlying asset for the lease term at the lease as an expense on a straight-line basis over the commencement date. The cost of the right-of-use lease term. asset measured at inception shall comprise of the
100 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
Embassy Office Parks REIT as a lessor rate that exactly discounts estimated future cash i. Determining whether an arrangement receipts through the expected life of the financial contains a lease instrument to the gross carrying amount of the A t inception of an arrangement, it is determined financial asset. whether the arrangement is or contains a lease. At inception or on reassessment of In calculating interest income, the effective interest the arrangement that contains a lease, the rate is applied to the gross carrying amount of payments and other consideration required the asset (when the asset is not credit-impaired). by such an arrangement are separated into However, for financial assets that have become those for other elements on the basis of credit-impaired subsequent to initial recognition, their relative fair values. If it is concluded interest income is calculated by applying the for a finance lease that it is impracticable to effective interest rate to the amortised cost of separate the payments reliably, then an asset the financial asset. If the asset is no longer credit- and a liability are recognised at an amount impaired, then the calculation of interest income equal to the fair value of the underlying reverts to the gross basis. asset. The liability is reduced as payments are made and an imputed finance cost on the o) Investments in subsidiaries and joint ventures liability is recognised using the incremental The Trust accounts for its investments in borrowing rate. subsidiaries and joint ventures at cost less accumulated impairment losses (if any) in its ii. Assets held under leases Condensed Standalone financial statements. L eases in which the Embassy Office Parks Investments accounted for at cost are accounted REIT does not transfer substantially all for in accordance with Ind AS 105, Non-current the risks and rewards of ownership of an Assets Held for Sale and Discontinued Operations, asset are classified as operating leases. when they are classified as held for sale. Leases are classified as finance leases when substantially all of the risks and rewards of p) Borrowing costs ownership transfer from the Embassy Office Borrowing costs are interest and other costs Parks REIT to the lessee. Amounts due from (including exchange differences relating to lessees under finance leases are recorded foreign currency borrowings to the extent that as receivables at the Embassy Office Parks they are regarded as an adjustment to interest REIT’s net investment in the leases. costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable iii. Initial direct costs to acquisition or construction of an asset which I nitial direct costs such as brokerage expenses necessarily take a substantial period of time to incurred specifically to earn revenues from an get ready for their intended use are capitalised operating lease are capitalised to the carrying as part of the cost of that asset. Other borrowing amount of leased asset and recognised costs are recognised as an expense in the period over the lease term on the same basis as in which they are incurred. rental income. Interest expense is recognised using the effective n) Revenue recognition interest method. The ‘effective interest rate’ is the Revenue is measured at the fair value of the rate that exactly discounts estimated future cash consideration received or receivable. This inter payments through the expected life of the financial alia involves discounting of the consideration due instrument to the amortised cost of the financial to the present value if payment extends beyond liability. In calculating interest expense, the normal credit terms. effective interest rate is applied to the amortised cost of the liability. Revenue is recognised when recovery of the consideration is probable and the amount of q) Taxation revenue can be measured reliably. Income tax comprises current and deferred tax. Income tax expense is recognised in the Recognition of dividend income, interest income Standalone Statement of Profit and Loss except Dividend income is recognised in profit or loss on to the extent it relates to items directly recognised the date on which the Embassy Office Parks REIT’s in equity or in other comprehensive income. right to receive payment is established. (i) Current tax: Interest income is recognised using the effective C urrent tax comprises the expected tax interest method. The ‘effective interest rate’ is the payable or receivable on the taxable income or
Half-Yearly Report 2020-21 101 Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
loss for the year and any adjustment to the tax the asset is realised or the liability is settled, payable or receivable in respect of previous based on the tax rate (and tax laws) that have years. The amount of current tax reflects the been enacted or substantively enacted at the best estimate of the tax amount expected reporting date. to be paid or received after considering the uncertainty, if any, related to income taxes. T he measurement of deferred tax reflects It is measured using tax rates (and tax laws) the tax consequences that would follow from enacted or substantively enacted by the the manner in which the Embassy Office reporting date. Parks REIT expects, at the reporting date, to recover or settle the carrying amount of its C urrent tax assets and liabilities are offset only assets and liabilities. if there is a legally enforceable right to set off the recognised amounts, and it is intended to D eferred tax assets and liabilities are offset realise the asset and settle the liability on a if there is a legally enforceable right to offset net basis or simultaneously. current tax assets and liabilities, and they relate to income taxes levied by the same (ii) Deferred tax: tax authority on the same taxable entity, or D eferred tax is recognised in respect of on different tax entities, but they intend to temporary differences between the carrying settle current tax liabilities and assets on a net amounts of assets and liabilities for financial basis or their tax assets and liabilities will be reporting purposes and the corresponding realised simultaneously. amounts used for taxation purposes. Deferred tax is also recognised in respect of carried T ax impact of timing difference which arise forward tax losses and tax credits. Deferred during the tax holiday period are recognised tax is not recognised for: only to the extent of those differences which are reversed after the tax holiday period. • Temporary differences arising on the initial recognition of assets and liabilities r) Provisions and contingencies in a transaction that is not a business The Embassy Office Parks REIT recognises a combination and that affects neither provision when there is a present obligation (legal accounting nor taxable profit or loss at the or constructive) as a result of a past obligating time of the transaction; event that probably requires an outflow of resources and a reliable estimate can be made • Taxable temporary differences arising on of the amount of the obligation. A disclosure initial recognition of goodwill. for a contingent liability is made when there is a possible obligation or a present obligation that D eferred income tax asset are recognised may, but probably will not, require an outflow of to the extent that it is probable that future resources. Where there is a possible obligation or taxable profits will be available against which a present obligation that the likelihood of outflow they can be used. The existence of unused tax of resources is remote, no provision or disclosure losses is strong evidence that future taxable is made. profit may not be available. Therefore, in case of a history of recent losses, the Embassy Provisions for onerous contracts, i.e. contracts Office Parks REIT recognises a deferred tax where the expected unavoidable costs of meeting asset only to the extent that it has sufficient the obligations under the contract exceed the taxable temporary differences or there is economic benefits expected to be received convincing other evidence that sufficient under it, are recognised when it is probable that taxable profit will be available against which an outflow of resources embodying economic such deferred tax asset can be realised. benefits will be required to settle a present obligation as a result of an obligating event, D eferred tax assets – unrecognised or based on a reliable estimate of such obligation. recognised, are reviewed at each reporting date and are recognised/reduced to the If the effect of the time value of money is material, extent that it is probable/no longer probable provisions are discounted. respectively that the related tax benefit will be realised. s) Operating segments The objectives of Embassy REIT are to undertake D eferred tax is measured at the tax rates that activities in accordance with the provisions of the are expected to apply to the period when
102 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
SEBI REIT Regulations and the Trust Deed. The cash nature and any deferrals or accruals of past or principal activity of Embassy REIT is to own and future cash receipts or payments. The cash flows invest in rent or income generating real estate and from operating, investing and financing activities related assets in India. of the Embassy Office Parks REIT are segregated.
The Board of Directors of the Manager allocate For the purpose of the Standalone Statement of the resources and assess the performance of the Cash Flow, cash and cash equivalents consist of Trust, thus are the Chief Operating Decision Maker cash and short-term deposits, as defined above, (CODM). In accordance with the requirements of net of outstanding bank overdrafts as they are Ind AS 108 - “Segment Reporting”, the CODM considered an integral part of the Embassy Office monitors the operating results of the business as a Parks REIT’s cash management. single segment, hence no separate segment needs to be disclosed. As the Embassy Office Parks x) Earnings per unit REIT operates only in India, hence no separate The basic earnings per unit is computed by geographical segment is disclosed. dividing the net profit/ (loss) attributable to the unitholders of the REIT by the weighted average t) Errors and estimates number of units outstanding during the reporting The Embassy Office Parks REIT revises its period. The number of units used in computing accounting policies if the change is required due diluted earnings/ (loss) per unit comprises the to a change in Ind AS or if the change will provide weighted average units considered for deriving more relevant and reliable information to the users basic earnings/ (loss) per unit and also the of the financial statements. Changes in accounting weighted average number of units which could policies are applied retrospectively. have been issued on the conversion of all dilutive potential units. A change in an accounting estimate that results in changes in the carrying amounts of recognised Dilutive potential units are deemed converted assets or liabilities or to profit or loss is applied as of the beginning of the reporting date, unless prospectively in the period(s) of change. Discovery they have been issued at a later date. In computing of errors results in revisions retrospectively by diluted earnings per unit, only potential equity restating the comparative amounts of assets, units that are dilutive and which either reduces liabilities and equity of the earliest prior period earnings per share or increase loss per units are in which the error is discovered. The opening included. balances of the earliest period presented are also restated. y) Earnings before finance costs, depreciation, amortization, impairment loss and income tax u) Cash and cash equivalents The Embassy Office Parks REIT has elected Cash and cash equivalents in the Standalone to present earnings before finance cost, Balance Sheet comprises of cash at banks and depreciation, amortisation and income tax as a on hand, deposits held at call with bank or separate line item on the face of the Standalone financial institutions, other short-term, highly Statement of Profit and Loss. The Embassy Office liquid investments with original maturities of Parks REIT measures earnings before finance three months or less that are readily convertible cost, depreciation, amortization, impairment to known amounts of cash and which are subject loss and income tax on the basis of profit/ (loss) to an insignificant risk of changes in value. from continuing operations. In its measurement, the Embassy Office Parks REIT does not include v) Cash distributions to Unitholders finance costs, depreciation and amortisation The Embassy Office Parks REIT recognizes a expense, impairment loss and tax expense. liability to make cash distributions to unitholders when the distribution is authorized, and a legal z) Distribution Policy obligation has been created. As per the REIT Under the provisions of the REIT Regulations, Regulations, a distribution is authorized when Embassy Office Parks REIT is required to distribute it is approved by the Board of Directors of the to the Unitholders not less than ninety percent Manager. A corresponding amount is recognized of the net distributable cash flows (‘NDCF’) of directly in equity. Embassy Office Parks REIT and the current policy of the Manager is to comply with such requirement. w) Standalone Statement of Cash flows The NDCF is calculated in accordance with the Standalone Cash flows are reported using the REIT Regulations and in the manner provided in indirect method, whereby net profit before tax is the NDCF framework defined by the Manager. adjusted for the effects of transactions of a non-
Half-Yearly Report 2020-21 103 Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
In terms of the REIT Regulations and NDCF in the form of (i) interest paid on Shareholder framework which prescribes for the minimum Debt provided by Embassy Office Parks REIT amount of NDCF to be distributed to Embassy to the SPV’s/Holding Company, (ii) Principal Office Parks REIT: repayment of Shareholder Debt, (iii) dividend declared by the SPVs/Holding Company and • not less than 90% of the NDCF of the SPVs received by Embassy Office Parks REIT and are required to be distributed to the Embassy (iv) Proceeds from sale of any Embassy REIT Office Parks REIT, in proportion to its assets. shareholding in the SPV, subject to applicable provisions of the Companies Act, 2013. Since Embassy Office Parks REIT endeavors to pay quarterly distributions, any shortfall as • 100% of the cash flows received by the regards minimum quarterly distribution by the Holding Company from the underlying SPVs SPVs and Holding Company to Embassy Office are required to be distributed to the Embassy Parks REIT, post interest paid on Shareholder Office Parks REIT, and not less than 90% of the Debt, interim dividend payments and Principal NDCF generated by the Holding Company on repayment of Shareholder Debt, would be done its own shall be distributed to the Embassy by declaring dividend, to the extent permitted Office Parks REIT, subject to applicable under the Companies Act, 2013. Repayment of provisions of the Companies Act, 2013. short-term construction debt given to SPV’s are • The aforesaid net distributable cash flows are not considered for the purpose of distributions. made available to Embassy Office Parks REIT
104 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated) 3. NON-CURRENT INVESTMENTS As at As at Particulars September March 31, 2020 30, 2020 Trade, unquoted investments in subsidiaries (at cost) (refer note below and note 24) - 405,940,204 (March 31, 2020: 405,940,204) equity shares of Umbel Properties Private 2,841.67 2,841.67 Limited of ` 10 each, fully paid up Less: Provision for impairment * (764.91) (587.46) - 2,129,635 (March 31, 2020 : 2,129,635) equity shares of Quadron Business Park Private 13,689.26 13,689.26 Limited of ` 10 each, fully paid up Less: Provision for impairment * (307.65) - 15,458.37 15,943.47 - 8,703,248 (March 31, 2020 : 8,703,248) equity shares of Embassy Office Parks Private 62,768.25 62,768.25 Limited of ` 10 each, fully paid up - 727,538 (March 31, 2020 : 727,538) equity shares of Manyata Promoters Private Limited 48,790.52 48,790.52 of ` 10 each, fully paid up - 271,611 (March 31, 2020 : 271,611) equity shares of Qubix Business Park Private Limited 5,595.08 5,595.08 of ` 10 each, fully paid up - 1,884,747 (March 31, 2020 : 1,884,747) equity shares of Oxygen Business Park Private 12,308.89 12,308.89 Limited of ` 10 each, fully paid up - 185,604,589 (March 31, 2020 : 185,604,589) equity shares of Earnest Towers Private 12,138.78 12,138.78 Limited of ` 10 each, fully paid up - 6,134,015 (March 31, 2020 : 6,134,015) equity shares of Vikhroli Corporate Park Private 10,710.94 10,710.94 Limited of ` 10 each, fully paid up - 124,561 (March 31, 2020 : 124,561) equity shares of Indian Express Newspapers (Mumbai) 6,463.79 6,463.79 Private Limited of ` 10 each, fully paid up - 130,022 (March 31, 2020 : 130,022) Class A equity shares of Indian Express Newspapers 6,747.17 6,747.17 (Mumbai) Private Limited of ` 10 each, fully paid up - 107,958 (March 31, 2020 : 107,958) equity shares of Galaxy Square Private Limited of 4,662.50 4,662.50 ` 100 each, fully paid up - 1,999 (March 31, 2020 : 1,999) equity shares of Embassy Energy Private Limited of ` 10 732.79 732.79 each, fully paid up 1,70,918.71 1,70,918.71 1,86,377.08 1,86,862.18 Aggregate amount of impairment recognised 1,072.56 587.46
* The recoverable amounts of the investments in subsidiaries have been computed based on value in use calculation of the underlying properties, computed semi-annually. The value in use calculation is based on discounted cash flow method. As at September 30, 2020, an amount of ` 1,072.56 million (March 31, 2020: ` 587.46 million) has been provided as impairment on investment in subsidiaries namely Umbel Properties Private Limited and Quadron Business Park Private Limited. The impairment charge arose mainly in the hospitality operations due to slower ramp up of occupancy coupled with the current economic conditions due to Covid-19 pandemic. In determining the value in use for investment in Hospitality operations, the cash flows were discounted at the rate of 13.60%. The financial projections basis which the future cash flows have been estimated consider the increase in economic uncertainties due to COVID-19, revisiting the key operating assumptions as well as growth rates factored while arriving at terminal value and subjecting these variables to sensitivity analysis.
Half-Yearly Report 2020-21 105 Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
Details of % shareholding in the subsidiaries, held by Trust is as under:
As at As at Name of Subsidiary September March 31, 2020 30, 2020 Embassy Office Parks Private Limited * 100.00% 100.00% Manyata Promoters Private Limited ** 64.23% 64.23% Umbel Properties Private Limited 100.00% 100.00% Embassy Energy Private Limited *** 19.99% 19.99% Earnest Towers Private Limited 100.00% 100.00% Indian Express Newspapers (Mumbai) Private Limited 100.00% 100.00% Vikhroli Corporate Park Private Limited 100.00% 100.00% Qubix Business Park Private Limited 100.00% 100.00% Quadron Business Park Private Limited 100.00% 100.00% Oxygen Business Park Private Limited 100.00% 100.00% Galaxy Square Private Limited 100.00% 100.00%
* Embassy Pune Techzone Private Limited is the wholly owned subsidiary of Embassy Office Parks Private Limited. ** Remaining 35.77% of ownership interest in Manyata Promoters Private Limited is owned by Embassy Office Parks Private Limited. Therefore, the Trust directly or indirectly owns 100% interest in Manyata Promoters Private Limited. *** Remaining 80.01% of ownership interest in Embassy Energy Private Limited is owned by Embassy Office Parks Private Limited. Therefore, the Trust directly or indirectly owns 100% interest in Embassy Energy Private Limited.
4 NON-CURRENT LOANS As at As at Particulars September March 31, 2020 30, 2020 Unsecured, considered good Loan to subsidiaries (refer note 24) 68,765.66 65,142.57 Security deposits - others - 1.00 68,765.66 65,143.57
Terms attached to loan to subsidiaries Security: Unsecured Interest: 12.50% per annum. The Lender may reset the rate of interest applicable to all or any tranche of the loan amount on: (i) any drawdown date; and (ii) any interest payment date prior to the repayment date, by giving a notice of not less than 5 (five) days to the borrower, provided that pursuant to any such reset, the interest rate shall continue to be not less than 12.50% per annum and not more than 14.00% per annum for any disbursements of the loan amount out of the proceeds of Listing.
Repayment: (a) Bullet repayment on the date falling at the end of 15 (fifteen) years from the first drawdown date. (b) Early repayment option (wholly or partially) is available to the borrower (SPV’s).
5 CURRENT INVESTMENTS As at As at Particulars September March 31, 2020 30, 2020 Non-trade, unquoted, investment in mutual funds HDFC Liquid Fund-Growth - 1,010.72 HDFC Overnight Fund-Growth - 255.01 ICICI Prudential Liquid Fund-Growth - 1,350.77 IDFC Cash Fund - Growth - 390.15 Axis Liquid Fund - Growth - 202.42 Trade, unquoted investments measured at amortised cost - Investment in debentures of a joint venture entity - refer note 24 - 724.38 2,500 (March 31, 2020: 2,500) 8.5% debentures - 3,933.45
106 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
As at As at Particulars September March 31, 2020 30, 2020 Investment measured at amortised cost - 724.38 Investment measured at fair value through profit or loss - 3,209.07 Investments measured at fair value through other comprehensive income - - Aggregate amount of impairment recognised - -
Terms attached to Investment in debentures of a joint venture entity
1. Nil (March 31, 2020 : 2,500) unlisted, unrated, secured redeemable, non-convertible debentures of Golflinks Software Park Private Limited. Outstanding as on September 30, 2020 : ` Nil (March 31, 2020 : ` 724.38 million).
2. Interest Rate: 8.50% p.a. on monthly outstanding balance.
3. Security: The debentures are secured by first ranking exclusive security interest over Torrey Pines building.
4. Redemption : Debentures shall be redeemed in 16 monthly instalment (principal and interest) of ` 160.00 million each and 17th instalment of ` 98.99 million in accordance with redemption schedule. Early redemption of the debentures shall be permitted from internal accruals of the issuer or any other sources, at the option of the issuer and without any prepayment penalty.
5. During the quarter ended September 30, 2020, the Investment in debentures has been fully redeemed.
6 CASH AND CASH EQUIVALENTS As at As at Particulars September March 31, 2020 30, 2020 Balances with banks - in current accounts * 4,224.13 2,845.19 - in escrow accounts Balances with banks for unclaimed distributions 0.81 0.26 4,224.94 2,845.45 * Balance in current accounts includes cheques on hand received from SPV’s in respect of interest payments and principal repayments of loans for the quarter ended September 30, 2020 amounting to ` 952.16 million (March 31, 2020 : ` 2,121.94 million)
7 CURRENT LOANS As at As at Particulars September March 31, 2020 30, 2020 Unsecured, considered good Loan to subsidiaries (refer note 24) 1,625.00 620.00 1,625.00 620.00
Terms attached to Loan to subsidiaries Security: Unsecured Interest : 12.50% per annum. The Lender may reset the rate of interest applicable to all or any tranche of the loan amount on: (i) any drawdown date; and (ii) any interest payment date prior to the repayment date, by giving a notice of not less than 5 (five) days to the borrower. Repayment: Bullet repayment and to be payable within 364 days from the date of disbursement. Early repayment option (wholly or partially) is available to the borrower (SPV’s).
Half-Yearly Report 2020-21 107 Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated) 8 OTHER FINANCIAL ASSETS As at As at Particulars September March 31, 2020 30, 2020 Other receivables - from others 0.57 3.15 0.57 3.15
9 OTHER CURRENT ASSETS As at As at Particulars September March 31, 2020 30, 2020 Unsecured, considered good Advance for supply of goods and rendering of services 0.80 0.44 Balances with government authorities 0.56 8.82 Prepayments 31.87 38.16 33.23 47.42
10 UNIT CAPITAL Particulars No in Million Amount As at April 1, 2019 771.67 2,29,039.26 Add: Reversal of issue expenses no longer payable (refer note below) - 81.70 As at March 31, 2020 771.67 2,29,120.96 As at April 1, 2020 771.67 2,29,120.96 Units issued during the period - - Balance as at September 30, 2020 771.67 2,29,120.96
Note: Issue expenses pertaining to the Initial Public Offering (IPO) and listing of the Units on the National Stock Exchange and Bombay Stock Exchange have been reduced from the Unitholders capital in accordance with Ind AS 32 Financial Instruments: Presentation. During the year ended March 31, 2020, provision for issue expenses no longer payable, has been reversed amounting to ` 81.70 million.
(a) Terms/rights attached to Units The Trust has only one class of Units. Each Unit represents an undivided beneficial interest in the Trust. Each holder of Units is entitled to one vote per unit. The Unitholders have the right to receive at least 90% of the Net Distributable Cash Flows of the Trust at least once in every six months in each financial year in accordance with the REIT Regulations. The Board of Directors of the Manager approves dividend distributions. The distribution will be in proportion to the number of Units held by the Unitholders. The Trust declares and pays dividends in Indian Rupees.
Under the provisions of the REIT Regulations, Embassy Office Parks REIT is required to distribute to Unitholders not less than ninety percent of the net distributable cash flows of Embassy Office Parks REIT for each financial year. Accordingly, a portion of the Unitholders’ funds contains a contractual obligation of the Trust to pay to its Unitholders cash distributions. The Unitholders funds could have been classified as compound financial instrument which contain both equity and liability components in accordance with Ind AS 32 - Financial Instruments: Presentation. However, in accordance with SEBI Circulars (No. CIR/IMD/ DF/146/2016 dated December 29, 2016 and No. CIR/IMD/DF/141/2016 dated December 26, 2016) issued under the REIT Regulations, the Unitholders funds have been classified as equity in order to comply with the mandatory requirements of Section H of Annexure A to the SEBI Circular dated December 26, 2016 dealing with the minimum disclosures for key financial statements. Consistent with Unitholders’ funds being classified as equity, the distributions to Unitholders is presented in Statement of Changes in Unitholders’ Equity and not as finance costs. In line with the above, the dividend payable to unitholders is recognised as liability when the same is approved by the Manager.
108 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
(b) Unitholders holding more than 5 percent Units in the Trust
As at As at Name of the share holder September 30, 2020 March 31, 2020 No of Units % holding No of Units % holding Embassy Property Developments Private Limited 11,54,84,802 14.97% 11,54,84,802 14.97% SG Indian Holding (NQ) Co I Pte Limited 8,83,33,166 11.45% 10,40,94,966 13.49% BRE Mauritius Investments 8,46,21,955 10.97% 9,36,10,755 12.13% Veeranna Reddy 4,98,47,582 6.46% 6,54,72,582 8.48% Bre/Mauritius Investments II 3,97,00,450 5.14% 4,56,30,850 5.91% India Alternate Property Limited 3,11,93,186 4.04% 3,94,46,986 5.11%
(c) T he Trust has not allotted any fully paid-up units by way of bonus shares nor has it bought back any class of units from the date of incorporation till the balance sheet date. Further, the Trust has issued an aggregate of 613,332,143 Units of ` 300 each for consideration other than cash from the date of incorporation till the balance sheet date.
11 OTHER EQUITY As at As at Particulars September March 31, 2020 30, 2020 Retained earnings * (16,477.06) (8,784.65) (16,477.06) (8,784.65)
*Refer Standalone Statement of changes in Unitholders’ Equity for detailed movement in other equity balances.
Retained earnings The cumulative gain or loss arising from the operations which is retained and is recognized and accumulated under the heading of retained earnings. At the end of the period/ year, the profit after tax is transferred from the statement of profit and loss to the retained earnings account.
12 BORROWINGS As at As at Particulars September March 31, 2020 30, 2020 Secured 36,500 (March 31, 2020 : 36,500) Embassy REIT Series I NCD 2019, face value of ` 1,000,000 each (net of issue expenses, at amortised cost) (refer note A below) - Tranche I 33,895.08 32,351.18 - Tranche II 6,974.68 6,667.66 7,500 (March 31, 2020 : Nil) Embassy REIT Series II NCD 2020, face value of ` 1,000,000 each (net of issue expenses, at amortised cost) (refer note B below) - Tranche A 7,357.74 - 48,227.50 39,018.84
Note: A. 36,500 (March 31, 2020 : 36,500) Embassy REIT Series I NCD 2019, face value of ` 1,000,000 each
In May 2019, the Trust issued 30,000 listed, AAA/Stable rated, secured, redeemable and non-convertible Embassy REIT Series I NCD 2019 (Tranche I), debentures having face value of ` 1 million each amounting to ` 30,000.00 million with an Internal Rate of Return (IRR) of 9.4% and will mature on 2 June 2022. In November 2019, the Trust further issued 6,500 such debentures (Tranche II ) with an Internal Rate of Return (IRR) of 9.05% and with same terms and conditions as Tranche I.
Half-Yearly Report 2020-21 109 Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
The Tranche I and Tranche II NCD described above were listed on the Bombay Stock Exchange on May 15, 2019 and November 28, 2019 respectively.
Security terms: The debentures are secured against each of the following in favor of the Security Trustee (holding for the benefit of the Debenture Trustee and ranking pari passu inter se the Debenture Holders):
1. A sole and exclusive first ranking charge created by MPPL on (a) land measuring 112.475 acres at Bengaluru together with blocks and various commercial buildings; (b) 1.022 acres (Phase 1) and 1.631 (Phase IV) acres of undivided right, title and interest in the commercial complex known as “Mfar Manyata Tech Park”. The above charge excludes L1 - Office block, consisting of 477,949 sq.ft of super built up area along with the undivided share of the lands and future development / construction on Blocks designated as F1 and L4 that MPPL may undertake in the Project “Embassy Manyata Business Park” along with the remaining undivided share of such land.
2. A sole and exclusive first ranking pledge created by the REIT and EOPPL over their total shareholding in the SPV’s namely QBPPL, ETPL, VCPPL, GSPL and MPPL together known as “secured SPVs”.
3. A sole and exclusive first ranking charge by way of hypothecation created by the REIT over identified bank accounts and receivables.
4. A sole and exclusive first ranking charge by way of hypothecation created by each secured SPV over identified bank accounts and receivables of each secured SPV.
5. A negative pledge on all assets of each secured SPV except MPPL.
Redemption terms: 1. These debentures are redeemable by way of bullet payment on 2 June 2022.
2. Tranche I debentures have a redemption premium of 9.4% IRR compounded annually and Tranche II debentures have a redemption premium of 9.05% IRR compounded annually.
3. In case of downgrading of credit rating , the IRR shall increase by 0.25% - 1.25% over and above the applicable IRR calculated from the date of change of rating. In case of any subsequent upgrading of credit rating , the IRR shall restore/decrease by 0.25% - 1.00% over and above the applicable IRR calculated from the date of change of rating.
4. The issuer shall have the option of redeeming all or part of the debentures on a pro-rata basis at any time on a specified call option date (between May 2021 to May 2022) by delivering a Call Option Notice to the debenture holders prior to the relevant call option date, subject to certain agreed minimum aggregate nominal value of debentures being redeemed.
B. 7,500 (March 31, 2020 : Nil ) Embassy REIT Series II NCD 2020, face value of ` 1,000,000 each
In September 2020, the Trust issued 7,500 listed, AAA/Stable, secured, redeemable and non-convertible Embassy REIT Series II NCD 2020 (Tranche A), debentures having face value of ` 1 million each amounting to ` 7,500.00 million with a coupon rate of 7.25% p.a. payable quarterly.
The Tranche A NCD described above were listed on the Bombay Stock Exchange on September 17, 2020.
Security terms: The debenture’s are secured against each of the following in favor of the Debenture Trustee (holding for the benefit of the Debenture Holders and ranking pari passu inter se the Debenture Holders):
1. A sole and exclusive first ranking charge by way of mortgage created by EOPPL on the constructed buildings and related parcels identified as Block 2, Block 3, Food court, Block 6, Block I, Block 11 and Block 5, having an aggregate leasable area of 2,00,674 square meters and forming part of the development
110 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
known as Embassy Tech Zone together with portion of land admeasuring 96,630 square meters on which the aforesaid buildings are constructed out of the aggregate area of land measuring 67.45 acres equivalent to 2,72,979 sq. mtrs.
2. A sole and exclusive first ranking pledge created by the REIT over the shareholding in the SPV’s namely IENMPL and EOPPL together known as “secured SPVs” along with shareholder loans given to these SPVs
3. A sole and exclusive first ranking charge by way of hypothecation created by REIT over identified bank accounts and receivables.
4. A sole and exclusive first ranking charge by way of hypothecation created by EOPPL over identified bank accounts and receivables.
5. A Corporate Guarantee issued by each of EOPPL and IENMPL;
Redemption terms: 1. Interest is payable on the last day of each financial quarter in a year until the Scheduled Redemption Date
2. Tranche A debentures will be redeemed on the expiry of 37 months from the Date of Allotment for the Tranche A debentures at par on 9 October 2023.
3. In case of downgrading of credit rating , the coupon rate shall increase by 0.25% - 1.25% over and above the applicable coupon rate calculated from the date of change of rating. In case of any subsequent upgrading of credit rating, the IRR shall restore/decrease by 0.25% - 1.00% over and above the coupon rate calculated from the date of change of rating.
4. The issuer shall have the option of redeeming all or part of the debentures on a pro-rata basis at any time on a specified call option date (between March 2023 to Sep 2023) by delivering a Call Option Notice to the debenture holders prior to the relevant call option date, subject to certain agreed minimum aggregate nominal value of debentures being redeemed.
Half-Yearly Report 2020-21 111 Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
Disclosure required under SEBI circular SEBI/HO/DDHS/DDHS/CIR/P/2018/71 dated April 13, 2018 1 Details of non-convertible debentures are as follows:-
Secured/ Previous due date Next due date Particulars Unsecured Principal Interest Principal Interest Embassy REIT Series I NCD 2019 Secured - - June 02, 2022 June 02, 2022 (Tranche I and II) Embassy REIT Series II NCD Secured - September 30, 2020 October 09, 2023 December 31, 2020 2020 (Tranche A)
2. Rating agency CRISIL has assigned a rating of “CRISIL AAA/Stable” to Embassy REIT Series I NCD 2019 and Embassy REIT Series II NCD 2020
C. Other requirements as per Guidelines for issuance of debt securities by Real Estate Investment Trusts (REITs)
As at As at Particulars September March 31, 2020 30, 2020 Asset cover ratio (refer a below) 14.30% 11.76% Debt -equity ratio (refer b below) 0.23 0.18 Debt-service coverage ratio (refer c below) 2.40 2.92 Interest-service coverage ratio (refer d below) 2.40 2.92 Net worth (refer e below) 2,12,643.90 2,20,336.31 Formulae for computation of ratios are as follows basis condensed standalone financial statements:- ) a A sset cover ratio = Total borrowings / Gross asset value of the Group as computed by independent valuers ) b Debt equity ratio* = Total borrowings/ Unitholders’ Equity ) c Debt Service Coverage Ratio = Earnings before Depreciation, Finance costs, Impairment loss and Tax/ (Finance costs + Principal Repayments made during the period) ) d Interest Service Coverage Ratio = Earnings before Depreciation, Finance costs, Impairment loss and Tax/ Finance costs (net of capitalisation) ) e Net worth = Unit capital + Other equity * Total borrowings = Long-term borrowings + Short-term borrowings + current maturities of long-term borrowings and Unitholder’s Equity = Unit Capital + Other equity.
13 TRADE PAYABLES As at As at Particulars September March 31, 2020 30, 2020 Trade payable - total outstanding dues to micro and small enterprises - - - total outstanding dues other than micro and small enterprises - to related party (refer note 24) - 4.66 - to others 10.74 2.02 10.74 6.68
14 OTHER FINANCIAL LIABILITIES As at As at Particulars September March 31, 2020 30, 2020 Unclaimed distribution 0.81 0.26 Other liabilities - to related party (refer note 24) 55.61 55.46 - to others 76.54 32.76 132.96 88.48
112 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated) 15 OTHER CURRENT LIABILITIES As at As at Particulars September March 31, 2020 30, 2020 Statutory dues 3.88 4.37 3.88 4.37
16 CURRENT TAX LIABILITIES (NET) As at As at Particulars September March 31, 2020 30, 2020 Provision for income-tax, net of advance tax 7.50 0.54 7.50 0.54
17 INTEREST INCOME
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended June September March September March September September 30, 2020 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2019 Interest income
- on fixed deposits 14.22 27.97 - 42.19 0.59 12.84 13.43 - on debentures (refer note 24) 2.52 12.09 40.90 14.61 53.39 90.99 144.38 - on loan to subsidiaries (refer 2,061.81 2,042.57 2,081.09 4,104.38 4,220.92 3,850.28 8,071.20 note 24) 2,078.55 2,082.63 2,121.99 4,161.18 4,274.90 3,954.11 8,229.01
18 OTHER INCOME
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended June September March September March September September 30, 2020 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2019 Gain / (loss) on mutual funds * 1.34 4.89 51.38 6.23 93.28 60.80 154.08 Miscellaneous - - 0.50 - - 1.26 1.26 1.34 4.89 51.88 6.23 93.28 62.06 155.34 * Includes net changes in fair value of mutual funds for quarter ended of ` Nil and the half year ended September 30, 2020 of Rs.Nil (March 31, 2020 of ` 1.72 million).
19 OTHER EXPENSES
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended June September March September March September September 30, 2020 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2019 Bank charges 0.01 0.01 0.02 0.02 0.24 0.02 0.26 Rates and taxes 4.61 5.77 0.14 10.38 1.34 0.14 1.48 Travelling and conveyance - - 0.17 - - 0.17 0.17 Marketing and advertisement 6.35 10.65 2.30 17.00 13.26 2.30 15.56 expenses * Miscellaneous expenses 0.21 0.52 0.54 0.73 0.14 0.54 0.68 11.18 16.95 3.17 28.13 14.98 3.17 18.15 * Also refer note 24
Half-Yearly Report 2020-21 113 Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated) 20 FINANCE COSTS
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended June September March September March September September 30, 2020 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2019 Interest expense - on accrual of premium on 941.23 909.70 696.35 1,850.93 1,685.32 1,165.01 2,850.33 redemption of Embassy REIT Series I NCD 2019 (Tranche I and II) - on Embassy REIT Series II 33.99 - - 33.99 - - - NCD 2020 (Tranche A) 975.22 909.70 696.35 1,884.92 1,685.32 1,165.01 2,850.33
21 TAX EXPENSE For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended June September March September March September September 30, 2020 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2019 Current tax 12.39 13.83 38.96 26.22 27.30 43.87 71.17 12.39 13.83 38.96 26.22 27.30 43.87 71.17
22 EARNINGS PER UNIT (EPU) Basic EPU amounts are calculated by dividing the profit for the period/year attributable to Unitholders by the weighted average number of units outstanding during the period/year. Diluted EPU amounts are calculated by dividing the profit attributable to unitholders by the weighted average number of units outstanding during the period/ year plus the weighted average number of units that would be issued on conversion of all the dilutive potential units into unit capital.
The following reflects the profit and unit data used in the basic and diluted EPU computation
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended June September March September March September September 30, 2020 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2019 Profit after tax for calculating 856.52 1,266.65 1,476.07 2,123.17 2,025.71 2,788.26 4,813.97 basic and diluted EPU Weighted average number of 771.67 771.67 771.67 771.67 771.67 771.67 771.67 Units (No. in million) Earnings Per Unit - Basic (Rupees/unit) 1.11 1.64 1.91 2.75 2.63 3.61 6.24 - Diluted (Rupees/unit) * 1.11 1.64 1.91 2.75 2.63 3.61 6.24 * The Trust does not have any outstanding dilutive units.
114 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated) 23 COMMITMENTS AND CONTINGENCIES a. Contingent liabilities
As at As at Particulars September March 31, 2020 30, 2020 Guarantee given to a Bank for loan obtained by a SPV 8,400.00 8,400.00 Note Trust has given an irrevocable and unconditional Corporate guarantee dated December 27, 2019, in favor of Catalyst Trusteeship Limited (Trustee) towards the term loan facility of ` 8,400 million by State Bank of India (Lender) to Manyata Promoters Private Limited (Borrower), an Embassy REIT SPV; to forthwith pay the Lender the outstanding amount of loan on demand by the Lender, upon the failure to make any payments/ repayments of the outstanding amounts (or any part thereof) on the respective due dates by Borrower. b. Statement of capital and other commitments ) i There are no capital commitments as at September 30, 2020 and March 31, 2020.
ii) The Trust is committed to provide financial support to some of its subsidiaries to ensure that these entities operate on going concern basis and are able to meet their debts and liabilities as they fall due.
24 RELATED PARTY DISCLOSURES I. List of related parties as at September 30, 2020 A. Parties to Embassy Office Parks REIT Embassy Property Developments Private Limited - Co-Sponsor BRE/ Mauritius Investments - Co-Sponsor Embassy Office Parks Management Services Private Limited - Manager Axis Trustee Services Limited - Trustee
The co-sponsor groups consist of the below entities Embassy Property Developments Private Limited - Co-Sponsor Embassy One Developers Private Limited D M Estates Private Limited Embassy Services Private Limited Golflinks Properties Private Limited
BRE/ Mauritius Investments - Co-Sponsor SG Indian Holding (NQ) Co. I Pte. Limited BREP VII SG Oxygen Holding (NQ) Pte Limited SG Indian Holding (NQ) Co. II Pte. Limited BREP Asia SBS Oxygen Holding (NQ) Limited SG Indian Holding (NQ) Co. III Pte. Limited BREP VII SBS Oxygen Holding (NQ) Limited BRE/Mauritius Investments II BREP Asia HCC Holding (NQ) Pte Limited BREP NTPL Holding (NQ) Pte Limited BREP VII HCC Holding (NQ) Pte Limited BREP VII NTPL Holding (NQ) Pte Limited BREP Asia SBS HCC Holding (NQ) Limited BREP Asia SBS NTPL Holding (NQ) Limited BREP VII SBS HCC Holding (NQ) Limited BREP VII SBS NTPL Holding (NQ) Limited India Alternate Property Limited BREP GML Holding (NQ) Pte Limited BREP Asia SG Indian Holding (NQ) Co II Pte. Limited BREP VII GML Holding (NQ) Pte Limited BREP VII SG Indian Holding (NQ) Co II Pte. Limited BREP Asia SBS GML Holding (NQ) Limited BREP Asia SBS Holding-NQ CO XI Limited BREP VII SBS GML Holding (NQ) Limited BREP VII SBS Holding-NQ CO XI Limited BREP Asia SG Oxygen Holding (NQ) Pte Limited
Directors and Key managerial personnel’s of the Manager (Embassy Office Parks Management Services Private Limited)
Directors Key management personnel Jitendra Virwani Michael David Holland - CEO Tuhin Parikh Rajesh Kaimal - CFO (upto May 19, 2020) Vivek Mehra Aravind Maiya - CFO (from May 19, 2020) Ranjan Ramdas Pai Ramesh Periasamy - Compliance Officer and Company Secretary Anuj Puri (upto 6 August 2020)
Half-Yearly Report 2020-21 115 Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
Directors Key management personnel Punita Kumar Sinha Deepika Srivastava-Compliance Officer and Company Secretary Robert Christopher Heady (from 7 August 2020) Aditya Virwani Asheesh Mohta - Director (from June 28, 2019, alternate to Robert Christopher Heady)
(i) Subsidiaries (SPV) Embassy Office Parks Private Limited Manyata Promoters Private Limited Umbel Properties Private Limited Embassy Energy Private Limited Earnest Towers Private Limited Indian Express Newspapers (Mumbai) Private Limited Vikhroli Corporate Park Private Limited Qubix Business Park Private Limited Quadron Business Park Private Limited Oxygen Business Park Private Limited Galaxy Square Private Limited Embassy Pune Techzone Private Limited (from December 06, 2019)
(ii) Joint Venture Golflinks Software Park Private Limited
B Other related parties with whom the transactions have taken place during the period/ year Embassy Shelters Private Limited Mac Charles (India) Limited Lounge Hospitality LLP
C Transactions during the period/year For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended June September March September March September September 30, 2020 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2019 Unsecured loans given to Quadron Business 50.00 - 180.00 50.00 - 7,509.00 7,509.00 Park Private Limited Embassy Office Parks - - - - - 5,858.30 5,858.30 Private Limited Manyata Promoters 3,355.38 - - 3,355.38 - 28,423.10 28,423.10 Private Limited Qubix Business - - - - - 3,179.90 3,179.90 Park Private Limited Oxygen Business Park Private 3,396.43 - - 3,396.43 - 4,030.30 4,030.30 Limited Earnest Towers Private Limited - 200.00 - 200.00 250.00 779.30 1,029.30 Vikhroli Corporate Park Private 100.00 61.00 - 161.00 40.00 4,726.70 4,766.70 Limited Galaxy Square Private Limited - - - - - 2,549.80 2,549.80 Umbel Properties - - - - - 1,795.20 1,795.20 Private Limited Indian Express Newspapers - - 810.00 - - 3,764.00 3,764.00 (Mumbai) Private Limited Embassy Energy Private - - 400.00 - 6,000.00 400.00 6,400.00 Limited
116 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended June September March September March September September 30, 2020 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2019 Short term construction loan given Manyata Promoters 455.00 300.00 - 755.00 - 3,050.00 3,050.00 Private Limited Oxygen Business - - 500.00 - 2,810.00 500.00 3,310.00 Park Private Limited Embassy Office 100.00 150.00 - 250.00 620.00 - 620.00 Parks Private Limited Investment in debentures Golflinks Software - - - - - 2,500.00 2,500.00 Park Private Limited Redemption of investment in debentures Golflinks Software 256.48 467.90 439.10 724.38 906.61 869.01 1,775.62 Park Private Limited Unsecured loans repaid by Embassy Office 242.01 195.33 450.00 437.34 1,114.34 560.00 1,674.34 Parks Private Limited Manyata Promoters 1,517.58 1,553.39 1,120.00 3,070.97 2,473.37 2,370.00 4,843.37 Private Limited Qubix Business 100.01 68.61 65.00 168.62 154.91 145.00 299.91 Park Private Limited Oxygen Business - - 17.00 - 170.68 77.00 247.68 Park Private Limited Earnest Towers 187.43 178.99 129.30 366.42 420.32 319.30 739.62 Private Limited Vikhroli Corporate 130.21 60.55 130.00 190.76 138.88 130.00 268.88 Park Private Limited Galaxy Square Private Limited 78.40 84.53 70.00 162.93 124.91 160.00 284.91 Umbel Properties - - 50.00 - 19.40 50.00 69.40 Private Limited Indian Express Newspapers - 26.96 25.00 26.96 204.97 225.00 429.97 (Mumbai) Private Limited Embassy Energy - 25.86 - 25.86 378.53 - 378.53 Private Limited Short term construction loan repaid by Manyata Promoters - - 750.00 - 300.00 2,750.00 3,050.00 Private Limited Oxygen Business - - 100.00 - 3,210.00 100.00 3,310.00 Park Private Limited Secondment fees Embassy Office Parks 0.36 0.35 0.35 0.71 0.71 0.71 1.42 Management Services Private Limited Investment management fees Embassy Office Parks 54.85 58.61 61.45 113.46 111.36 103.45 214.81 Management Services Private Limited
Half-Yearly Report 2020-21 117 Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended June September March September March September September 30, 2020 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2019 Trademark license fees Embassy Shelters Private 0.36 0.35 0.35 0.71 0.71 0.71 1.42 Limited Trustee fee expenses Axis Trustee Services Limited 0.74 0.74 0.74 1.48 1.49 1.48 2.96 Marketing and advertisement expenses Lounge Hospitality LLP - - - - 0.06 - 0.06 Mac Charles (India) Limited - - 0.48 - - 0.48 0.48 Travelling and conveyance Quadron Business Park Private - - 0.02 - - 0.02 0.02 Limited Interest income Quadron Business 384.12 379.93 378.43 764.05 764.87 742.04 1,506.91 Park Private Limited Embassy Office 150.00 154.08 179.84 304.08 338.15 360.41 698.56 Parks Private Limited Manyata Promoters 727.83 735.40 885.74 1,463.23 1,600.41 1,498.31 3,098.72 Private Limited Qubix Business Park 88.56 89.75 97.53 178.31 187.91 195.54 383.45 Private Limited Oxygen Business Park 143.61 117.88 130.74 261.49 260.33 250.49 510.82 Private Limited Earnest Towers Private Limited 9.73 9.44 18.31 19.17 23.80 42.33 66.13 Vikhroli Corporate 141.80 140.17 148.92 281.97 287.57 294.61 582.18 Park Private Limited Galaxy Square Private Limited 68.68 70.58 77.35 139.26 149.27 155.94 305.21 Umbel Properties 54.38 53.78 56.56 108.16 108.88 111.89 220.77 Private Limited Indian Express Newspapers 104.20 103.90 106.99 208.10 216.32 198.03 414.35 (Mumbai) Private Limited Embassy Energy 188.90 187.66 0.68 376.56 283.42 0.68 284.10 Private Limited Interest received on debentures Golflinks Software 2.52 12.09 40.90 14.61 53.39 90.99 144.38 Park Private Limited Dividend received Embassy Energy Private - - 6.00 - - 6.00 6.00 Limited Indian Express Newspapers 185.00 147.00 7.87 332.00 87.85 7.87 95.72 (Mumbai) Private Limited Oxygen Business Park Private 150.00 141.00 98.25 291.00 90.00 98.25 188.25 Limited Expenses incurred by related party on behalf of the Trust Embassy Office Parks 0.21 0.83 47.70 1.04 8.56 47.70 56.26 Management Services Private Limited
118 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended June September March September March September September 30, 2020 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2019 Expenses incurred by the Trust on behalf of related party Manyata Promoters - 0.82 - 0.82 - - - Private Limited Others - 2.11 - 2.11 - - - Guarantee given to bank for loan obtained by SPV Manyata Promoters Private - - - - 8,400.00 - 8,400.00 Limited Guarantee given by SPV on behalf of REIT Indian Express Newspapers 7,500.00 - - 7,500.00 - - - (Mumbai) Private Limited and Embassy Office Parks Private Limited
Half-Yearly Report 2020-21 119 Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
D Closing balances As at As at Particulars September March 31, 2020 30, 2020 Unsecured loan receivable (non-current) Quadron Business Park Private Limited 13,236.87 12,582.58 Embassy Office Parks Private Limited 3,746.62 4,183.96 Manyata Promoters Private Limited 23,864.16 23,579.73 Qubix Business Park Private Limited 2,711.36 2,879.99 Oxygen Business Park Private Limited 7,285.73 3,782.62 Earnest Towers Private Limited 123.27 289.68 Vikhroli Corporate Park Private Limited 4,468.05 4,497.82 Galaxy Square Private Limited 2,101.96 2,264.89 Umbel Properties Private Limited 1,833.96 1,725.80 Indian Express Newspapers (Mumbai) Private Limited 3,364.16 3,334.03 Embassy Energy Private Limited 6,029.52 6,021.47 Short term construction loan Manyata Promoters Private Limited 755.00 - Embassy Office Parks Private Limited 870.00 620.00 Other financial liabilities Embassy Office Parks Management Services Private Limited 54.14 55.46 Axis Trustee Services Limited 1.47 - Trade payables Embassy Office Parks Management Services Private Limited - 4.66 Investment in Debentures (current) Golflinks Software Park Private Limited - 724.38 Investment in equity shares of subsidiaries Embassy Office Parks Private Limited 62,768.25 62,768.25 Manyata Promoters Private Limited 48,790.52 48,790.52 Quadron Business Park Private Limited* 13,381.61 13,689.26 Oxygen Business Park Private Limited 12,308.89 12,308.89 Earnest Towers Private Limited 12,138.78 12,138.78 Vikhroli Corporate Park Private Limited 10,710.94 10,710.94 Qubix Business Park Private Limited 5,595.08 5,595.08 Galaxy Square Private Limited 4,662.50 4,662.50 Umbel Properties Private Limited * 2,076.76 2,254.21 Indian Express Newspapers (Mumbai) Private Limited 13,210.96 13,210.96 Embassy Energy Private Limited 732.79 732.79 Guarantee given to bank for loan obtained by SPV Manyata Promoters Private Limited 8,400.00 8,400.00 Guarantee given by SPV on behalf of REIT Indian Express Newspapers (Mumbai) Private Limited and 7,500.00 - Embassy Office Parks Private Limited
* Net of provision for impairment of ` 1,072.56 million (March 31, 2020 : ` 587.46 million).
120 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated) 25 FINANCIAL INSTRUMENTS: (a) The carrying value and fair value of financial instruments by categories are as below:
Carrying value Fair Value Carrying value Fair Value Particulars September 30, 2020 September 30, 2020 March 31, 2020 March 31, 2020 Financial assets Fair value through profit and loss Investments in mutual funds - - 3,209.07 3,209.07 Amortised cost Investments - - 724.38 - Loans 70,390.66 - 65,763.57 - Cash and cash equivalents 4,224.94 - 2,845.45 - Other financial assets 0.57 - 3.15 - Total assets 74,616.17 - 72,545.62 3,209.07 Financial liabilities Amortised cost Borrowings 48,227.50 49,425.37 39,018.84 38,984.00 Other financial liabilities 132.96 - 88.48 - Trade payables 10.74 - 6.68 - Total liabilities 48,371.20 49,425.37 39,114.00 38,984.00
The fair value of cash and cash equivalents, fixed deposits, trade receivables, inter-corporate deposits given, lease deposits, trade payables, loans and other financial assets and liabilities approximate their carrying amounts.
Fair value hierarchy Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). b) Financial instruments Quantitative disclosures fair value measurement hierarchy for assets as at:
Particulars Date of valuation Total Level 1 Level 2 Level 3 Financial assets measured at fair value: FVTPL financial investments: Investment in mutual funds September 30, 2020 - - - - Investment in mutual funds March 31, 2020 3,209.07 3,209.07 - - c) Transfers between Level 1, Level 2 and Level 3 There were no transfers between Level 1, Level 2 or Level 3 during the period ended September 30, 2020 and year ended March 31, 2020.
d) Determination of fair values Fair values of financial assets and liabilities have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
) i The fair value of mutual funds are based on price quotations at reporting date.
ii) T he fair values of other current financial assets and financial liabilities are considered to be equivalent to their carrying values.
iii) T he fair values of borrowings at fixed rates are considered to be equivalent to present value of the future contracted cashflows discounted at the current market rate.
Half-Yearly Report 2020-21 121 Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated) 26 DETAILS OF UTILISATION OF PROCEEDS OF ISSUE OF EMBASSY REIT SERIES II NCD 2020, TRANCHE A ARE AS FOLLOWS:
Actual utilisation Unutilised amount Objects of the issue as per the prospectus Proposed utilisation upto September as at September 30, 2020 30, 2020 Granting shareholder debt including refinance of existing 7,251.81 7,251.81 - debt, construction and development at underlying SPV’s General purposes including issue expenses 248.19 85.20 162.99 Total 7,500.00 7,337.01 162.99
27 INVESTMENT MANAGEMENT FEES Pursuant to the Investment management agreement dated June 12 2017, as amended, the Manager is entitled to fees @ 1% of REIT Distributions which shall be payable either in cash or in Units or a combination of both, at the discretion of the Manager. The fees has been determined for undertaking management of the Trust and its investments. Investment management fees accrued for the quarter and half year ended September 30, 2020 amounts to ` 54.85 million and ` 113.46 million respectively. There are no changes during the period ended September 30, 2020 in the methodology for computation of fees paid to the Manager.
28 SECONDMENT FEES Pursuant to the Secondment agreement dated March 11, 2019, the Manager is entitled to fees of Rupees One Lakh (Rs.1,00,000) per month in respect certain employees of the Manager being deployed to the Trust in connection with the operation and management of the assets of the Trust. Secondment Fees for the quarter and half year ended September 30, 2020 amounts to ` 0.36 million and ` 0.71 million respectively. There are no changes during the period ended September 30, 2020 in the methodology for computation of secondment fees paid to the Manager.
29 The trust outsources its manpower and technology assistance requirements and does not have any employee on its roles and hence does not incur any employee related benefits/costs.
30 DISTRIBUTIONS The Board of Directors of the Manager to the Trust, in their meeting held on November 2, 2020, have declared distribution to Unitholders of ` 5.50 per unit which aggregates to ` 4,244.16 million for the quarter ended September 30, 2020. The distributions of ` 5.50 per unit comprises ` 1.90 per unit in the form of interest payment, ` 0.42 per unit in the form of dividend and the balance ` 3.18 per unit in the form of amortization of SPV debt.
Along with distribution of ` 4,498.81 million/ ` 5.83 per unit for the quarter ended June 30, 2020, the cumulative distribution for the half year ended September 30, 2020 aggregates to ` 8,742.97 million/ ` 11.33 per unit.
122 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Standalone Financial Statements
(all amounts in ` million unless otherwise stated)
31 The figures for the half year ended March 31, 2020 are the derived figures between the audited figures in respect of the year ended March 31, 2020 and the published year-to-date figures for the half year ended September 30, 2019, which were subject to limited review.
The accompanying notes referred to above are an integral part of Condensed Standalone Financial Statements.
As per our report of even date attached for S R Batliboi & Associates LLP for and on behalf of the Board of Directors of Chartered Accountants Embassy Office Parks Management Services Private Limited ICAI firm's registration number: 101049W/E300004 (as Manager to the Embassy Office Parks REIT)
Sd/- Sd/- Sd/- Adarsh Ranka Jitendra Virwani Tuhin Parikh Partner Director Director Membership number: 209567 DIN: 00027674 DIN: 00544890 Place: Bengaluru Place: Bengaluru Place: Mumbai Date: November 2, 2020 Date: November 2, 2020 Date: November 2, 2020
Half-Yearly Report 2020-21 123 Review report
The Board of Directors Embassy Office Parks Management Services Private Limited (“ the Manager”) (Acting in its capacity as the Manager of Embassy Office Parks REIT) 1st Floor, Embassy Point 150, Infantry Road Bengaluru -560001
INTRODUCTION SCOPE OF REVIEW 1. We have reviewed the accompanying unaudited 3. We conducted our review in accordance with condensed consolidated interim Ind AS financial the Standard on Review Engagements (SRE) statements of Embassy Office Parks REIT (the 2410, “Review of Interim Financial Information “REIT”), its subsidiaries and a Joint venture Performed by the Independent Auditor of the (together referred as “the Group”), which comprise Entity” issued by the Institute of Chartered the unaudited condensed consolidated balance Accountants of India. This standard requires sheet as at September 30, 2020, the unaudited that we plan and perform the review to obtain condensed consolidated statement of profit and moderate assurance as to whether the Condensed loss, including other comprehensive income and Consolidated Interim Ind AS Financial Statements unaudited condensed consolidated statement of is free of material misstatement. A review Cash Flows for the quarter and half year ended consists of making inquiries, primarily of Manager September 30, 2020, the unaudited condensed personnel responsible for financial and accounting consolidated statement of changes in Unitholder’s matters, and applying analytical and other review equity for the half year ended September procedures. A review is substantially less in scope 30, 2020 and the consolidated Statement of than an audit conducted in accordance with Net Assets at fair value as at September 30, Standards on Auditing and consequently does 2020 and the consolidated Statement of Total not enable us to obtain assurance that we would Returns at fair value and the Statement of Net become aware of all significant matters that might Distributable Cash Flows of the REIT and each of be identified in an audit. Accordingly, we do not its subsidiaries for the half year ended September express an audit opinion. 30, 2020 and a summary of the significant accounting policies and select explanatory 4. The Condensed Consolidated Interim Ind AS information (together hereinafter referred to as Financial Statements includes the financial the “Condensed Consolidated Interim Ind AS information of the following entities: Financial Statements”) being submitted by the REIT pursuant to the requirements of Regulation Sl. Name of the entities 23 of the Securities and Exchange Board of India No (Real Estate Investment Trusts) Regulations, 2014, A Parent Entity as amended including any guidelines and circulars 1 Embassy Office Parks REIT issued thereunder (“REIT Regulations’’). B Subsidiaries 2. The Condensed Consolidated Interim Ind AS 1 Embassy Office Parks Private Limited Financial Statements are the responsibility of the 2 Manyata Promoters Private Limited (‘MPPL’) Manager and has been approved by the Board 3 Umbel Properties Private Limited of Directors of the Manager. The Condensed 4 Embassy-Energy Private Limited Consolidated Interim Ind AS Financial Statements 5 Galaxy Square Private Limited are prepared in accordance with the requirements 6 Quadron Business Park Private Limited of Indian Accounting Standard (Ind AS) 34 “Interim 7 Qubix Business Park Private Limited Financial Reporting”, as prescribed in Rule 2(1)(a) 8 Oxygen Business Park Private Limited of the Companies (Indian Accounting Standards) 9 Earnest Towers Private Limited Rules, 2015 (as amended) and other accounting 10 Vikhroli Corporate Park Private Limited principles generally accepted in India, to the 11 Indian Express Newspapers (Mumbai) extent not inconsistent with the REIT Regulations. Private Limited Our responsibility is to issue a conclusion on the 12 Embassy Pune Techzone Private Limited Condensed Consolidated Interim Ind AS Financial Statements based on our review. C Jointly Controlled entity 1 Golflinks Software Park Private Limited
124 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
CONCLUSION opinions obtained and pending outcome of such 5. Based on our review conducted as above, nothing legal matter no provision has been made in these has come to our attention that causes us to believe Condensed Consolidated Interim Ind AS Financial that the accompanying Condensed Consolidated Statements. Interim Ind AS Financial Statements have not been prepared in all material respects in accordance Our conclusion is not modified in respect to the with the requirements of Ind AS 34, as prescribed in above matter. Rule 2(1)(a) of the Companies (Indian Accounting Standards) Rules, 2015 (as amended) and other For S.R. Batliboi & Associates LLP accounting principles generally accepted in India. Chartered Accountants ICAI Firm registration number: 101049W/E300004 EMPHASIS OF MATTER 6. We draw attention to note 46(iv) to the Condensed Sd/- Consolidated Interim Ind AS Financial Statements per Adarsh Ranka which refers to the uncertainty in relation to two Partner pending cases, as regards Property tax dues Membership No.: 209567 aggregating to `3,313.08 million as at September UDIN: 20209567AAAAGM5740 30, 2020 payable by MPPL, before judicial forums basis, previously raised demand notices Place: Bengaluru, India by the local regulatory authority. Based on legal Date: November 2, 2020
Half-Yearly Report 2020-21 125 Consolidated balance sheet
(all amounts in ` million unless otherwise stated)
As at As at September Note 30, 2020 March 31, 2020 (Unaudited) (Audited) ASSETS Non-current assets Property, plant and equipment 3 20,364.54 20,698.93 Capital work-in-progress 4 2,912.74 2,334.07 Investment property 5 192,501.12 194,076.48 Investment property under development 8 2,504.04 1,773.39 Goodwill 6 50,289.37 50,289.37 Intangible assets 7 4,923.13 5,001.36 Equity accounted investee 9 24,287.47 24,091.36 Financial assets - Loans 11 668.75 668.71 - Other financial assets 12 1,407.16 1,188.54 Non-current tax assets (net) 13 1,252.13 1,554.70 Other non-current assets 14 16,814.33 16,475.64 Total non-current assets 317,924.78 318,152.55 Current assets Inventories 15 11.17 12.82 Financial assets - Investments 10 - 12,273.59 - Trade receivables 16 237.12 242.25 - Loans 17 51.30 51.49 - Cash and cash equivalents 18A 13,174.15 3,249.16 - Other bank balances 18B 108.79 169.79 - Other financial assets 19 467.52 399.46 Other current assets 20 329.93 351.22 Total current assets 14,379.98 16,749.78 Total assets 332,304.76 334,902.33 EQUITY AND LIABILITIES EQUITY Unit capital 21 229,120.96 229,120.96 Other equity 22 (11,390.66) (5,943.12) Total equity 217,730.30 223,177.84 LIABILITIES Non-current liabilities Financial liabilities - Borrowings 23 59,399.35 56,170.51 - Other financial liabilities 24 2,845.34 3,118.65 Provisions 25 6.23 5.25 Deferred tax liabilities (net) 26 39,842.16 40,407.38 Other non-current liabilities 27 425.52 386.70 Total non-current liabilities 102,518.60 100,088.49 Current liabilities Financial liabilities - Trade payables 28 - total outstanding dues of micro and small enterprises 4.15 2.48 - total outstanding dues of creditors other than micro and 184.47 252.27 small enterprises - Other financial liabilities 29 10,912.48 10,562.79 Provisions 30 - 2.37 Other current liabilities 31 864.98 781.58 Current tax liabilities (net) 32 89.78 34.51 Total current liabilities 12,055.86 11,636.00 Total equity and liabilities 332,304.76 334,902.33 Significant accounting policies 2 The accompanying notes referred to above are an integral part of these Condensed Consolidated Financial Statements. As per our report of even date attached for S R Batliboi & Associates LLP for and on behalf of the Board of Directors of Chartered Accountants Embassy Office Parks Management Services Private Limited ICAI firm's registration number: 101049W/E300004 (as Manager to the Embassy Office Parks REIT)
Sd/- Sd/- Sd/- Adarsh Ranka Jitendra Virwani Tuhin Parikh Partner Director Director Membership number: 209567 DIN: 00027674 DIN: 00544890 Place: Bengaluru Place: Bengaluru Place: Mumbai Date: November 2, 2020 Date: November 2, 2020 Date: November 2, 2020
126 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Consolidated statement of profit and loss
(all amounts in ` million unless otherwise stated)
For the For the For the For the half For the half For the half For the quarter quarter quarter year ended year ended year ended year ended ended ended ended September March September March Note September June 30, September 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 2020 30, 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)** (Unaudited) (Audited) INCOME AND GAINS Revenue from operations 33 5,401.50 5,162.26 5,206.04 10,563.76 10,892.14 10,557.08 21,449.22 Interest 34 211.41 284.59 87.00 496.00 246.04 231.31 477.35 Other income 35 20.89 45.47 87.96 66.36 379.04 133.96 513.00 Total Income 5,633.80 5,492.32 5,381.00 11,126.12 11,517.22 10,922.35 22,439.57 EXPENSES Cost of materials consumed 36 4.86 1.09 29.67 5.95 68.88 50.06 118.94 Employee benefits expense 37 51.35 59.71 83.96 111.06 199.07 178.10 377.17 Operating and maintenance 38 83.06 54.11 168.36 137.17 272.30 355.16 627.46 expenses Repairs and maintenance 40 248.79 285.74 314.39 534.53 596.15 619.23 1,215.38 Valuation expenses 2.21 2.21 2.36 4.42 5.02 4.72 9.74 Audit fees 11.84 10.39 14.69 22.23 18.61 24.59 43.20 Insurance expenses 18.99 14.29 18.11 33.28 32.21 34.53 66.74 Investment management 45 173.51 175.12 176.05 348.63 352.88 348.06 700.94 fees Trustee fees 0.84 0.79 0.74 1.63 1.48 1.48 2.96 Legal and professional fees 55.76 137.03 78.41 192.79 208.93 175.01 383.94 Other expenses 39 252.93 244.48 300.35 497.41 677.95 568.38 1,246.33 Total Expenses 904.14 984.96 1,187.09 1,889.10 2,433.48 2,359.32 4,792.80 Earnings before finance costs, 4,729.66 4,507.36 4,193.91 9,237.02 9,083.74 8,563.03 17,646.77 depreciation, amortisation, impairment loss and tax Finance costs 41 1,437.33 1,372.54 822.64 2,809.87 2,148.51 1,655.03 3,803.54 Depreciation expense 42 1,153.44 1,139.10 1,417.53 2,292.54 2,364.45 2,755.55 5,120.00 Amortisation expense 42 39.74 39.50 26.79 79.24 81.17 80.07 161.24 Impairment loss 3, 6 - - - - 1,775.98 - 1,775.98 Profit before share of profit 2,099.15 1,956.22 1,926.95 4,055.37 2,713.63 4,072.38 6,786.01 of equity accounted investee and tax Share of profit after tax of 245.51 245.38 247.61 490.89 527.03 642.30 1,169.33 equity accounted investee Profit before tax 2,344.66 2,201.60 2,174.56 4,546.26 3,240.66 4,714.68 7,955.34 Tax expense: Current tax 43 392.75 387.17 227.01 779.92 765.01 596.38 1,361.39 Deferred tax charge/ 43 (224.20) (77.71) (440.69) (301.91) 271.35 (282.62) (11.27) (credit) Minimum alternate tax credit 43 (149.54) (150.25) (84.90) (299.79) (757.53) (292.59) (1,050.12) entitlement (MAT) MAT written off/ (written 43 - - 150.75 - (150.75) 150.75 - back) 19.01 159.21 (147.83) 178.22 128.08 171.92 300.00 Profit for the period/ year 2,325.65 2,042.39 2,322.39 4,368.04 3,112.58 4,542.76 7,655.34 Items of other comprehensive income Items that will not be reclassified subsequently to profit or loss - Remeasurements of - - - - 0.16 - 0.16 defined benefit liability, net of tax Total comprehensive income 2,325.65 2,042.39 2,322.39 4,368.04 3,112.74 4,542.76 7,655.50 attributable to Unitholders for the period/ year Earnings per Unit 44 Basic 3.01 2.65 3.01 5.66 4.03 5.89 9.92 Diluted 3.01 2.65 3.01 5.66 4.03 5.89 9.92 Significant accounting policies 2 ** Refer note 55.
The accompanying notes referred to above are an integral part of these Condensed Consolidated Financial Statements. As per our report of even date attached for S R Batliboi & Associates LLP for and on behalf of the Board of Directors of Chartered Accountants Embassy Office Parks Management Services Private Limited ICAI firm's registration number: 101049W/E300004 (as Manager to the Embassy Office Parks REIT) Sd/- Sd/- Sd/- Adarsh Ranka Jitendra Virwani Tuhin Parikh Partner Director Director Membership number: 209567 DIN: 00027674 DIN: 00544890 Place: Bengaluru Place: Bengaluru Place: Mumbai Date: November 2, 2020 Date: November 2, 2020 Date: November 2, 2020
Half-Yearly Report 2020-21 127 Consolidated statement of changes in unitholders’ equity
(all amounts in ` million unless otherwise stated)
A. UNIT CAPITAL No in Million Amount Balance as on April 1, 2019 771.67 229,039.26 Add: Reversal of issue expenses no longer payable - 81.70 Balance as at March 31, 2020 771.67 229,120.96 Balance as on April 1, 2020 771.67 229,120.96 Balance as at September 30, 2020 771.67 229,120.96
B. OTHER EQUITY Particulars Retained Earnings Balance as on April 1, 2019 (94.47) Add: Profit for the year ended March 31, 2020 7,655.34 Add: Other Comprehensive Income for the year ended March 31, 2020 0.16 Less: Distribution to Unitholders for the quarter ended June 30, 2019* (4,166.99) Less: Distribution to Unitholders for the quarter ended September 30, 2019* (4,630.00) Less: Distribution to Unitholders for the quarter ended December 31, 2019* (4,707.16) Balance as at March 31, 2020 (5,943.12) Balance as on April 1, 2020 (5,943.12) Add: Profit for the half year ended September 30, 2020 4,368.04 Less: Distribution to Unitholders for the quarter ended March 31, 2020* (5,316.77) Less: Distribution to Unitholders for the quarter ended June 30, 2020* (4,498.81) Balance as at September 30, 2020 (11,390.66)
* The distributions made by Trust to its Unitholders are based on the Net Distributable Cash flows (NDCF) of Embassy Office Parks REIT under the REIT Regulations which includes repayment of debt by SPVs to Embassy REIT.
As per our report of even date attached for S R Batliboi & Associates LLP for and on behalf of the Board of Directors of Chartered Accountants Embassy Office Parks Management Services Private Limited ICAI firm's registration number: 101049W/E300004 (as Manager to the Embassy Office Parks REIT)
Sd/- Sd/- Sd/- Adarsh Ranka Jitendra Virwani Tuhin Parikh Partner Director Director Membership number: 209567 DIN: 00027674 DIN: 00544890 Place: Bengaluru Place: Bengaluru Place: Mumbai Date: November 2, 2020 Date: November 2, 2020 Date: November 2, 2020
128 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report Disclosure pursuant to SEBI circular No. CIR/IMD/ DF/146/2016
(all amounts in ` million unless otherwise stated) A) STATEMENT OF NET ASSETS AT FAIR VALUE As at As at Unit of S.No Particulars September 30, 2020 March 31, 2020 measurement Book Value Fair value Book Value Fair value A Assets ` in millions 332,304.76 404,426.05 334,902.33 401,354.66 B Liabilities ` in millions 114,574.46 115,037.56 111,724.49 112,254.26 C Net Assets (A-B) ` in millions 217,730.30 289,388.49 223,177.84 289,100.40 D No. of units Numbers 771,665,343 771,665,343 771,665,343 771,665,343 E NAV (C/D) ` 282.16 375.02 289.22 374.64
Notes:
1) Measurement of fair values: The fair value of investment property, investment property under development (including capital advances), property, plant and equipment (relating to the hotel property in UPPL and QBPL, and the solar power plant in EEPL); capital work-in-progress (relating to the proposed hotel to be developed in MPPL) and the investment in GLSP as at September 30, 2020 and March 31, 2020 has been determined by iVAS Partners, independent external property valuers appointed under Regulation 21 of REIT regulations, having appropriately recognised professional qualifications and recent experience in the location and category of the properties being valued in conjunction with value assessment services undertaken by CBRE.
Valuation technique The fair value measurement for all of the investment property has been categorized as a Level 3 fair value based on the inputs to the valuation technique used.
The valuers have followed a Discounted Cash Flow method. The valuation model considers the present value of net cash flows to be generated from the respective properties, taking into account the expected rental growth rate, vacancy period, occupancy rate, average room rent, lease incentive costs and blended tariff rates. The expected net cash flows are discounted using the risk adjusted discount rates. Among other factors, the discount rate estimation considers the quality of a building and its location (primary vs secondary), tenant credit quality and lease terms.
Given the COVID-19 related uncertainties, the independent valuers have, as a precautionary measure, referenced material valuation uncertainty in arriving at their valuation as at September 30, 2020 and March 31, 2020.
2) Property wise break up of Fair value of Assets as at September 30, 2020 is as follows: Fair value of investment Total property, investment Other assets liabilities property under Asset wise Book value Particulars at book value Total assets to be development, property, NAV of assets (***) (Note i) considered plant and equipment and (Note ii) capital work-in-progress * 100% owned assets MPPL 160,561.00 1,428.61 161,989.61 14,816.97 147,172.64 121,128.47 EOPPL 21,607.00 836.14 22,443.14 1,369.99 21,073.15 19,808.50 UPPL 4,375.00 135.13 4,510.13 599.41 3,910.72 4,774.07 EEPL 10,002.00 7,850.50 17,852.50 7,738.35 10,114.15 16,958.58 GSPL 8,783.00 161.68 8,944.68 425.86 8,518.82 6,073.25 ETPL 13,908.00 476.95 14,384.95 435.66 13,949.29 10,526.23 OBPL 21,242.00 780.54 22,022.54 1,389.43 20,633.11 15,261.56 QBPPL 10,153.00 256.87 10,409.87 297.16 10,112.71 9,043.27 QBPL 25,181.00 2,115.31 27,296.31 677.83 26,618.48 22,684.48 EPTPL - - - 0.29 (0.29) - VCPPL 16,404.00 290.72 16,694.72 728.69 15,966.03 13,168.65 IENMPL 17,722.00 218.41 17,940.41 974.24 16,966.17 14,521.63 Trust - 54,068.60 54,068.60 85,583.68 (31,515.08) 54,068.60 Total 309,938.00 68,619.46 378,557.46 115,037.56 263,519.90 308,017.29 Investment in GLSP ** 25,868.59 - 25,868.59 - 25,868.59 24,287.47 335,806.59 68,619.46 404,426.05 115,037.56 289,388.49 332,304.76
Half-Yearly Report 2020-21 129 Disclosure pursuant to SEBI circular No. CIR/IMD/ DF/146/2016
(all amounts in ` million unless otherwise stated)
3) Property wise break up of Fair value of Assets as at March 31, 2020 is as follows: Fair value of investment Total property, investment Other assets liabilities property under Asset wise Book value of Particulars at book value Total assets to be development, property, NAV assets (***) (Note i) considered plant and equipment and (Note ii) capital work-in-progress * 100% owned assets MPPL 153,906.00 1,843.65 155,749.65 17,124.79 138,624.86 120,534.72 EOPPL 21,032.00 793.58 21,825.58 1,477.83 20,347.75 19,871.20 UPPL 4,436.00 234.28 4,670.28 698.92 3,971.36 4,952.51 EEPL 10,289.00 7,692.82 17,981.82 7,646.18 10,335.64 17,047.79 GSPL 8,695.60 171.71 8,867.31 390.26 8,477.05 6,156.07 ETPL 13,911.00 278.71 14,189.71 406.46 13,783.25 10,442.18 OBPL 21,416.00 1,071.11 22,487.11 4,947.58 17,539.53 15,634.42 QBPPL 10,085.00 258.29 10,343.29 280.74 10,062.55 9,091.54 QBPL 26,408.00 2,153.75 28,561.75 751.29 27,810.46 22,783.48 VCPPL 16,624.00 236.10 16,860.10 740.97 16,119.13 13,128.86 IENMPL 17,866.00 234.98 18,100.98 956.27 17,144.71 14,528.77 EPTPL - 0.07 0.07 - 0.07 0.07 Trust - 56,639.36 56,639.36 76,832.97 (20,193.61) 56,639.36 Total 304,668.60 71,608.41 376,277.01 112,254.26 264,022.75 310,810.97 Investment in GLSP ** 25,077.65 - 25,077.65 - 25,077.65 24,091.36 329,746.25 71,608.41 401,354.66 112,254.26 289,100.40 334,902.33
* Fair values of investment property, investment property under development, property, plant and equipment, capital work in progress and investment in GLSP as at September 30, 2020 and March 31, 2020 as disclosed above are solely based on the fair valuation report of iVAS Partners, independent external property valuers appointed under Regulation 21 of REIT regulations, having appropriately recognised professional qualifications and recent experience in the location and category of the properties being valued in conjunction with value assessment services undertaken by CBRE.
For the purpose of fair valuation of assets, the Embassy Office Parks Group has fair valued its investment property, investment property under development (including capital advances), property, plant and equipment (relating to the hotel property in UPPL and QBPL, and the solar power plant in EEPL); capital work-in-progress (relating to the proposed hotel to be developed in MPPL) and the investment in GLSP.
** Fair value of equity investments in GLSP has been done based on equity valuation method proportionate to stake held in GLSP.
*** Assets at fair value include Goodwill of ` 50,289.37 million on book value basis (net off impairment loss, refer note 6). The Goodwill of `50,289.37 million mainly arises on account of requirement to value individual assets and liabilities acquired on business combination at fair values as well as the requirement to recognise deferred tax liability of `38,783.20 million (on the date of acquisition), calculated as a difference between the tax effect of the fair value of the acquired assets and liabilities and their tax bases.
Notes: i. Other assets includes cash and cash equivalents and other working capital balances which are not factored in the discounted cashflow method used in determining the fair value of investment property, investment property under development, property, plant and equipment and capital work-in-progress. ii. Total liabilities includes all liabilities except lease liability.
As per our report of even date attached for S R Batliboi & Associates LLP for and on behalf of the Board of Directors of Chartered Accountants Embassy Office Parks Management Services Private Limited ICAI firm's registration number: 101049W/E300004 (as Manager to the Embassy Office Parks REIT)
Sd/- Sd/- Sd/- Adarsh Ranka Jitendra Virwani Tuhin Parikh Partner Director Director Membership number: 209567 DIN: 00027674 DIN: 00544890 Place: Bengaluru Place: Bengaluru Place: Mumbai Date: November 2, 2020 Date: November 2, 2020 Date: November 2, 2020
130 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report Disclosure pursuant to SEBI circular No. CIR/IMD/ DF/146/2016
(all amounts in ` million unless otherwise stated) B) STATEMENT OF TOTAL RETURNS AT FAIR VALUE
For the half For the half For the half year year ended year ended S.No Particulars ended September 30, September March 31, 2020 2020 30, 2019 A Total comprehensive income 4,368.04 3,112.74 4,542.76 B Add : Changes in fair value not recognised in total 4,003.72 1,707.31 2,254.49 comprehensive income (Refer note 1 below) C (A+B) Total Return 8,371.76 4,820.05 6,797.25
Note: 1. In the above statement, changes in fair value for the half year ended September 30, 2020 has been computed based on the difference in fair values of Investment Property, Investment Property under development, Property, Plant and Equipment (relating to the hotel property in UPPL and QBPL, and the Solar power plant in EEPL); Capital Work-in-progress (relating to the proposed hotel to be developed in MPPL and investment in GLSP) as at September 30, 2020 (reviewed) as compared with the values as at March 31, 2020 (audited) net of cash spent on construction during the period. The fair values of the afore- mentioned assets as at September 30, 2020 (reviewed) and March 31, 2020 (audited) are solely based on the valuation report of iVAS Partners, independent external property valuers appointed under Regulation 21 of REIT regulations, having appropriately recognised professional qualifications and recent experience in the location and category of the properties being valued in conjunction with value assessment services undertaken by CBRE.
As per our report of even date attached for S R Batliboi & Associates LLP for and on behalf of the Board of Directors of Chartered Accountants Embassy Office Parks Management Services Private Limited ICAI firm's registration number: 101049W/E300004 (as Manager to the Embassy Office Parks REIT)
Sd/- Sd/- Sd/- Adarsh Ranka Jitendra Virwani Tuhin Parikh Partner Director Director Membership number: 209567 DIN: 00027674 DIN: 00544890 Place: Bengaluru Place: Bengaluru Place: Mumbai Date: November 2, 2020 Date: November 2, 2020 Date: November 2, 2020
Half-Yearly Report 2020-21 131 Consolidated statement of cashflow
(all amounts in ` million unless otherwise stated)
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended ended ended ended September September September September March 31, March 31, June 30, 30, 2020 30, 2019 30, 2020 30, 2019 2020 2020 2020 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)** (Unaudited) (Audited) CASH FLOW FROM OPERATING ACTIVITIES Profit before share of profit of equity 2,099.15 1,956.22 1,926.95 4,055.37 2,713.63 4,072.38 6,786.01 accounted investees and tax Adjustments for : Non-cash and other adjustments Depreciation expense 1,153.44 1,139.10 1,417.53 2,292.54 2,364.45 2,755.55 5,120.00 Amortisation expense 39.74 39.50 26.79 79.24 81.17 80.07 161.24 Assets no longer required, written off 9.30 4.19 0.27 13.49 6.20 4.96 11.16 Allowance for credit loss - - - - 0.59 0.26 0.85 Liabilities no longer required written - (4.59) - (4.59) (13.29) - (13.29) back Leasing commission paid - - (36.53) - - (41.86) (41.86) Profit on sale of mutual funds (16.84) (24.18) (75.76) (41.02) (273.44) (86.52) (359.96) Finance costs 1,437.33 1,372.54 822.65 2,809.87 2,148.50 1,655.04 3,803.54 Interest income (190.79) (272.97) (82.19) (463.76) (238.04) (213.00) (451.04) Fair value loss/(gain) on investment - 3.00 5.20 3.00 19.96 (13.25) 6.71 measured at FVTPL Impairment loss recognised - - - 1,775.98 - 1,775.98 Operating profits before working 4,531.33 4,212.81 4,004.91 8,744.14 8,585.71 8,213.63 16,799.34 capital changes Working capital adjustments - Inventories 1.15 0.50 5.76 1.65 (1.69) (5.71) (7.40) - Trade receivables 15.01 (0.87) 73.73 14.14 162.20 (35.60) 126.60 - Loans and other financial assets (314.17) (111.13) (71.28) (425.30) 195.38 536.32 731.70 (current and non-current) - Other assets (current and non- 73.96 (49.64) 55.42 24.32 282.39 (229.45) 52.94 current) - Trade payables 12.48 (74.02) 17.46 (61.54) 1.98 (155.81) (153.83) - Other financial liabilities (current (165.66) 171.81 27.11 6.15 362.42 615.28 977.70 and non-current) - Other liabilities and provisions 33.08 87.74 (42.78) 120.82 (259.57) 76.56 (183.01) (current and non-current) Cash generated from operating 4,187.18 4,237.20 4,070.33 8,424.38 9,328.82 9,015.22 18,344.04 activities before taxes Taxes (paid)/ refunds received (net) (133.21) (252.46) (403.04) (385.67) (694.73) (734.55) (1,429.28) Cash generated from operating 4,053.97 3,984.74 3,667.29 8,038.71 8,634.09 8,280.67 16,914.76 activities CASH FLOW FROM INVESTING ACTIVITIES (Investments)/ redemption of deposits 82.14 119.94 (407.95) 202.08 923.49 1,836.71 2,760.20 with banks (net) (Investments)/ redemption in mutual 16.84 11,570.39 701.95 11,587.23 (5,717.55) (3,533.54) (9,251.09) funds (net) Investment in debentures - - - - - (2,500.00) (2,500.00) Repayment of investment in 256.48 467.90 182.63 724.38 906.61 869.01 1,775.62 debentures Payment for purchase of Investment (1,230.56) (887.54) (2,372.31) (2,118.10) (7,241.60) (4,555.95) (11,797.55) Property and Property, Plant and Equipment and intangibles including Capital Work-in-progress and Investment Property under Development Payment for business acquisition - - - - - (3,450.00) (3,450.00) Dividend received 175.00 90.00 170.00 265.00 365.00 170.00 535.00 Interest received 191.45 276.30 65.18 467.75 323.50 162.16 485.66 Net cash flow generated from / (508.65) 11,636.99 (1,660.50) 11,128.34 (10,440.55) (11,001.61) (21,442.16) (used in) investing activities
132 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Consolidated statement of cashflow
(all amounts in ` million unless otherwise stated)
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended ended ended ended September September September September March 31, March 31, June 30, 30, 2020 30, 2019 30, 2020 30, 2019 2020 2020 2020 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)** (Unaudited) (Audited) CASH FLOW FROM FINANCING ACTIVITIES Interest paid (316.01) (284.35) (334.44) (600.36) (863.39) (699.09) (1,562.48) Repayments of borrowings (6,809.82) (48.29) (20.46) (6,858.11) (3,475.60) (69,987.06) (73,462.66) Proceeds from borrowings (net of 7,855.53 340.15 2,255.88 8,195.68 17,051.43 31,895.83 48,947.26 issue expenses) Transaction costs related to issue of - - (63.68) - (51.54) (2,327.09) (2,378.63) units Cash used in distribution to (4,498.44) (5,316.59) (4,189.83) (9,815.03) (9,336.89) (4,189.83) (13,526.72) Unitholders (including taxes on account of distribution by SPV's) Finance Lease payments (27.83) - - (27.83) (20.37) - (20.37) Security deposits received - 1.00 - 1.00 30.00 - 30.00 Net cash (used in) / generated from (3,796.57) (5,308.08) (2,352.53) (9,104.65) 3,333.64 (45,307.24) (41,973.60) financing activities Net increase/ (decrease) in cash and (251.25) 10,313.65 (345.74) 10,062.40 1,527.18 (48,028.18) (46,501.00) cash equivalents Cash and cash equivalents at the 13,425.40 3,111.75 1,930.31 3,111.75 1,584.57 49,612.75 49,612.75 beginning of the period / year Cash and cash equivalents at the end 13,174.15 13,425.40 1,584.57 13,174.15 3,111.75 1,584.57 3,111.75 of the period / year Components of cash and cash equivalents (refer note 18A) Cash in hand 0.69 1.01 0.92 0.69 1.12 0.92 1.12 Balances with banks - in current accounts 13,172.64 5,992.02 1,036.19 13,172.64 3,225.16 1,036.19 3,225.16 - in escrow accounts 0.82 17.37 81.33 0.82 2.88 81.33 2.88 - in fixed deposits - 7,415.00 466.13 - 20.00 466.13 20.00 Book overdraft - - - - (137.41) - (137.41) 13,174.15 13,425.40 1,584.57 13,174.15 3,111.75 1,584.57 3,111.75 ** Refer note 55. Significant accounting policies (Refer Note 2)
The accompanying notes referred to above are an integral part of these Condensed Consolidated Financial Statements. As per our report of even date attached for S R Batliboi & Associates LLP for and on behalf of the Board of Directors of Chartered Accountants Embassy Office Parks Management Services Private Limited ICAI firm's registration number: 101049W/E300004 (as Manager to the Embassy Office Parks REIT)
Sd/- Sd/- Sd/- Adarsh Ranka Jitendra Virwani Tuhin Parikh Partner Director Director Membership number: 209567 DIN: 00027674 DIN: 00544890 Place: Bengaluru Place: Bengaluru Place: Mumbai Date: November 2, 2020 Date: November 2, 2020 Date: November 2, 2020
Half-Yearly Report 2020-21 133 Disclosure pursuant to SEBI circular No. CIR/IMD/ DF/146/2016
(all amounts in ` million unless otherwise stated) NET DISTRIBUTABLE CASH FLOWS (NDCF) PURSUANT TO GUIDANCE UNDER PARAGRAPH 6 TO SEBI CIRCULAR NO. CIR/IMD/DF/146/2016 (i) Embassy Office Parks REIT - Standalone
For the For the For the For the For the half For the half For the quarter quarter quarter half year Sl year ended year ended year ended Particulars ended ended ended ended No March 31, September March 31, September June 30, September September 2020 30, 2019 2020 30, 2020 2020 30, 2019 30, 2020 1. Cash flows received from SPVs and investment entity in the form of: • Interest 1,499.05 1,709.81 2,121.29 3,208.86 3,883.35 3,940.58 7,823.93 • Dividends (net of 335.00 288.00 112.12 623.00 177.85 112.12 289.97 applicable taxes) • Repayment of Shareholder 2,512.12 2,662.12 2,495.40 5,174.24 6,106.92 4,905.31 11,012.23 Debt • Proceeds from buy-backs/ ------capital reduction (net of applicable taxes) 2. Add: Proceeds from sale of ------investments, assets or sale of shares of SPVs adjusted for the following: • Applicable capital gains ------and other taxes • Related debts settled or ------due to be settled from sale proceeds • Directly attributable ------transaction costs • Proceeds reinvested or ------planned to be reinvested as per Regulation 18(16)(d) of the REIT Regulations 3. Add: Proceeds from sale ------of investments, assets or sale of shares of SPVs not distributed pursuant to an earlier plan to re-invest as per Regulation 18(16)(d) of the REIT Regulations, if such proceeds are not intended to be invested subsequently 4. Add: Any other income of the 15.56 34.58 54.26 50.14 99.19 67.86 167.05 Trust and not captured herein 5. Less: Any other expense (15.22) (20.83) (3.17) (36.05) (20.23) (3.17) (23.40) accruing at the Trust level and not captured herein 6. Less: Any fees, including but - not limited to: • Trustee fees (0.83) (0.80) (0.74) (1.63) (1.48) (1.48) (2.96) • REIT Management Fees (54.85) (58.61) (61.45) (113.46) (111.36) (103.45) (214.81) • Valuer fees (2.22) (2.21) (2.36) (4.43) (5.02) (4.72) (9.74) • Legal and professional fees (15.86) (106.07) (5.47) (121.93) (85.98) (16.91) (102.89) • Trademark license fees (0.36) (0.35) (0.71) (0.71) (0.71) (0.71) (1.42) • Secondment fees (0.36) (0.35) (0.71) (0.71) (0.71) (0.71) (1.42) • Interest on external debt (33.99) - - (33.99) - - -
134 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report Disclosure pursuant to SEBI circular No. CIR/IMD/ DF/146/2016
(all amounts in ` million unless otherwise stated)
For the For the For the For the For the half For the half For the quarter quarter quarter half year Sl year ended year ended year ended Particulars ended ended ended ended No March 31, September March 31, September June 30, September September 2020 30, 2019 2020 30, 2020 2020 30, 2019 30, 2020 • Repayment of external ------debt 7. Less: Income tax (net of (8.95) (10.31) (47.75) (19.26) (17.11) (53.51) (70.62) refund) and other taxes paid (as applicable) Net Distributable Cash Flows 4,229.09 4,494.98 4,660.71 8,724.07 10,024.71 8,841.21 18,865.92
Notes:
1. The Board of Directors of the Manager to the Trust, in their meeting held on November 2, 2020, have declared distribution to Unitholders of `5.50 per unit which aggregates to `4,244.16 million for the quarter ended September 30, 2020. The distributions of `5.50 per unit comprises `1.90 per unit in the form of interest payment, `0.42 per unit in the form of dividend and the balance `3.18 per unit in the form of amortization of SPV debt.
Along with distribution of `5.83 per unit for the quarter ended June 30, 2020, the cumulative distribution for the half year ended September 30, 2020 aggregates to `11.33 per unit.
2. Repayment of short-term construction debt given to SPV’s and interest accrued but not due on borrowings as at the period/year end are not considered for the purpose of distributions.
3. Repayment of external debt, to the extent it is by way of refinancing, is not considered for the purpose of computation of NDCF.
As per our report of even date attached for S R Batliboi & Associates LLP for and on behalf of the Board of Directors of Chartered Accountants Embassy Office Parks Management Services Private Limited ICAI firm's registration number: 101049W/E300004 (as Manager to the Embassy Office Parks REIT)
Sd/- Sd/- Sd/- Adarsh Ranka Jitendra Virwani Tuhin Parikh Partner Director Director Membership number: 209567 DIN: 00027674 DIN: 00544890 Place: Bengaluru Place: Bengaluru Place: Mumbai Date: November 2, 2020 Date: November 2, 2020 Date: November 2, 2020
Half-Yearly Report 2020-21 135 - - - - - Total (1.46) 26.30 950.95 380.34 (180.14) 2,041.19 1,140.43 (149.54) ------(1.11) EPTPL ------7.93 (2.55) 37.35 65.75 14.00 VCPPL 141.72 ------5.72 (4.14) 15.32 14.35 82.33 (14.91) 88.56 QBPPL ------(all amounts(all stated) otherwise unless in ` million QBPL 0.06 75.17 384.10 (40.88) (264.80) ------4.50 (12.91) (4.50) (0.05) 69.69 OBPPL 140.76 (24.48) ------11.76 (1.46) 61.83 15.45 104.19 (57.95) IENMPL 100.93 ------GSPL 3.88 0.27 37.32 22.28 68.67 28.46 ------ETPL 9.79 11.55 (1.23) 43.72 50.40 105.88 ------UPPL 54.37 56.92 (38.78) (108.52) ------EEPL 86.31 (30.17) (78.34) 188.90 ------MPPL 59.54 215.52 727.84 (117.50) (83.44) 385.76 1,031.47 ------0.51 58.98 EOPPL 56.06 90.89 132.29 182.43 (55.69) Depr As Curr Def MA Ind A R Dir Pr impairment back and loss profit and loss profit above other item any sale proceeds settled from 18(16)(d) as per Regulation reinvested of the REIT Regulations
C
Profit/(loss) after tax as per statement of tax as per statement after Profit/(loss) (A) (standalone) and loss profit Adjustment: and Non-cash adjustments Add/(Less): to: including but not limited taxes, Particulars • • and amortisation eciation, • off or liabilities written sets written • of as per statement ent tax charge • tax erred • of as per statement T adjustments in not considered S adjustments • be debts settled or due to elated • • costs transaction ectly attributable be or planned to reinvested oceeds Add: Interest on shareholders debt on shareholders Interest Add: and loss of profit statement to charged Add/(Less): Loss/(gain) on sale of Loss/(gain) Add/(Less): or of SPVs or shares assets investments, Entity Investment Add: Proceeds from sale of investments, sale of investments, from Proceeds Add: or of SPVs or sale of shares assets the for Entity adjusted Investment following Disclosure pursuantDisclosure SEBI to No. CIR/IMD/DF/146/2016 circular NET DISTRIBUTABLE CASH (NDCF) FLOWS PURSUANT GUIDANCE TO UNDER PARAGRAPH SEBI 6 TO CIRCULAR NO. CIR/IMD/ DF/146/2016 (ii) For the quarter ended September 30, 2020 for distribution Sl alculation of net distributable cash flows at each Asset SPV and Hold Co No 1 2 3 4 5
136 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report - - - - - Total 20.98 (124.19) (48.36) 2,916.07 4,056.50 ------0.29 0.29 EPTPL (0.82) ------27.72 VCPPL (20.60) 271.32 205.57 ------14.67 (13.51) QBPPL 188.39 106.06 ------(all amounts(all stated) otherwise unless in ` million QBPL (6.93) 70.47 (76.25) 335.27 - - - - - 8.05 25.71 OBPPL (12.64) 194.13 207.04 ------23.01 135.93 IENMPL (20.90) 236.86 ------GSPL 15.60 114.68 (24.48) 152.00 ------ETPL 3.76 91.16 (26.83) 197.04 ------0.12 UPPL (2.87) 69.76 (38.76) - - - - - 12.11 EEPL (3.97) (26.09) 148.75 227.09 - - - - - MPPL 51.37 (9.63) (15.64) 1,213.82 2,245.29 ------EOPPL (47.82) (25.82) 391.83 209.40 R Pr investments by way of debt way by investments reduction
Add: Proceeds from sale of investments, sale of investments, from Proceeds Add: or of SPVs or sale of shares assets Entity not distributed Investment re-invest an earlier plan to pursuant to of the REIT 18(16)(d) as per Regulation not are if such proceeds Regulations, subsequently be invested to intended Particulars • of the debt in case epayment • capital buy-backs/ from oceeds Add/(Less): Other adjustments, including Other adjustments, Add/(Less): net changes in security to but not limited capital, etc. deposits, working Less: Income tax (net of refund) and other tax (net of refund) Income Less: paid (as applicable) taxes Less: Maintenance capex not charged in not charged capex Maintenance Less: the to and loss, of profit the statement debt not funded by extent Total Adjustments (B) Adjustments Total Less: External debt principal repayment * debt principal repayment External Less: Net distributable Cash Flows C = (A+B). Add: Cash flow received from SPV and SPV from received Cash flow Add: (applicable for Entity towards Investment not covered the extent to only, Holdco above): * Repayment of borrowings done at SPV level out of Initial Public Offering and Non-convertible debenture proceedsof short-term have not been construction considered debt for NDCF from Embassy computation. REIT Asset to Further, SPV’s/ repayment Hold Co upon ultimate availment of external credit facilityquarter and interest end are accrued not considered but not due for on NDCF borrowings computation. as at the ** Interest on external debt paid and capitalised development to work in progress, the to extent funded debt, by are not considered for NDCF computation. Distribution of up 90% to of the above NDCF is required as per the REIT Regulations subject compliance to with the requirements of Companies Act, 2013 Sl No 6 7 Disclosure pursuantDisclosure SEBI to No. CIR/IMD/DF/146/2016 circular 11 8 9 10
Half-Yearly Report 2020-21 137 - - - - - Total 15.32 (0.40) 946.61 373.33 (95.75) 1,033.14 (150.25) 2,023.45 ------EPTPL (0.02) ------5.64 0.56 13.42 35.77 (3.91) VCPPL 140.17 ------5.91 12.77 14.34 89.74 65.03 QBPPL (10.97) (10.38) ------1.19 (all amounts(all stated) otherwise unless in ` million QBPL 75.06 379.91 (50.56) (254.15) ------8.74 6.62 12.50 117.88 69.67 OBPPL (6.62) (23.82) ------2.42 62.91 40.41 (3.13) (2.39) 107.62 IENMPL 103.90 ------3.16 0.15 GSPL 22.25 22.83 70.58 43.85 ------ETPL 9.43 10.77 50.35 44.80 110.03 (3.36) ------UPPL 0.33 53.78 55.45 (37.66) (106.27) ------1.28 EEPL 86.30 187.65 (15.32) (40.53) - - - - - 2.73 MPPL 62.64 201.63 382.92 733.48 (88.91) 966.80 (96.55) ------2.76 91.59 51.08 43.38 EOPPL 136.93 122.64 (43.75) Depr As Curr Def MA Ind A R Dir Pr impairment back and loss profit and loss profit above other item any sale proceeds settled from 18(16)(d) as per Regulation reinvested of the REIT Regulations
Profit/(loss) after tax as per statement of tax as per statement after Profit/(loss) (A) (standalone) and loss profit Particulars • • and amortisation eciation, • off or liabilities written sets written • of as per statement ent tax charge • tax erred • of as per statement T adjustments in not considered S adjustments • be debts settled or due to elated • • costs transaction ectly attributable be or planned to reinvested oceeds Adjustment: and Non-cash adjustments Add/(Less): to: including but not limited taxes, Add: Interest on shareholders debt on shareholders Interest Add: and loss of profit statement to charged Add/(Less): Loss/(gain) on sale of Loss/(gain) Add/(Less): or of SPVs or shares assets investments, Entity Investment Add: Proceeds from sale of investments, sale of investments, from Proceeds Add: or of SPVs or sale of shares assets the for Entity adjusted Investment following Disclosure pursuantDisclosure SEBI to No. CIR/IMD/DF/146/2016 circular For the quarter ended June 30, 2020 for distribution Sl No 1 2 3 4 5
138 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report - - - - - Total 266.45 (48.29) (242.16) 4,121.45 3,088.31 ------0.01 0.01 EPTPL (0.01) ------18.97 VCPPL 194.94 (10.04) 200.58 ------6.15 93.34 QBPPL 158.37 (14.22) ------(all amounts(all stated) otherwise unless in ` million QBPL 88.48 (34.10) 342.63 (28.87) - - - - - 21.40 65.05 OBPPL (8.56) 262.86 250.36 ------(0.91) 171.02 IENMPL (32.19) 278.64 ------GSPL 11.92 111.25 155.10 (19.64) ------ETPL (4.01) 78.49 188.52 (29.49) ------UPPL 0.04 43.14 (63.13) (28.80) - - - - - 9.12 EEPL 10.28 213.50 254.03 (25.28) - - - - - MPPL (14.45) 240.49 (101.28) 2,289.50 1,322.70 ------EOPPL (18.60) 226.40 349.04 (36.99) R Pr investments by way of debt way by investments reduction
Add: Proceeds from sale of investments, sale of investments, from Proceeds Add: or of SPVs or sale of shares assets Entity not distributed Investment re-invest an earlier plan to pursuant to of the REIT 18(16)(d) as per Regulation not are if such proceeds Regulations, subsequently be invested to intended Particulars • of the debt in case epayment • capital buy-backs/ from oceeds Add/(Less): Other adjustments, including Other adjustments, Add/(Less): net changes in security to but not limited capital, etc. deposits, working Less: Income tax (net of refund) and other tax (net of refund) Income Less: paid (as applicable) taxes Less: Maintenance capex not charged in not charged capex Maintenance Less: the to and loss, of profit the statement debt not funded by extent Total Adjustments (B) Adjustments Total Less: External debt principal repayment * debt principal repayment External Less: Net distributable Cash Flows C = (A+B). Add: Cash flow received from SPV and SPV from received Cash flow Add: (applicable for Entity towards Investment not covered the extent to only, Holdco above): Sl No 6 * Repayment of borrowings done at SPV level out of Initial Public Offering and Non-convertible debenture proceedsof short-term have not been construction considered debt for NDCF from Embassy computation. REIT Asset to Further, SPV’s/ repayment Hold Co upon ultimate availment of external credit facilityquarter and interest end are accrued not considered but not due for on NDCF borrowings computation. as at the ** Interest on external debt paid and capitalised development to work in progress, the to extent funded debt, by are not considered for NDCF computation. Distribution of up 90% to of the above NDCF is required as per the REIT Regulations subject compliance to with the requirements of Companies Act, 2013 7 Disclosure pursuantDisclosure SEBI to No. CIR/IMD/DF/146/2016 circular 11 8 9 10
Half-Yearly Report 2020-21 139 ------Total 0.27 19.59 65.85 884.11 997.15 165.22 413.93 (77.36) 1,830.96 ------12.27 VCPPL (0.69) 148.92 (15.75) 108.08 (54.42) ------12.25 10.53 97.53 (1.87) 69.83 QBPPL (9.22) (0.88) (10.62) ------0.10 QBPL 67.74 38.83 43.98 (3.02) 379.23 (23.59) (281.98) ------(all amounts(all stated) otherwise unless in ` million 10.41 32.41 10.08 26.99 28.44 OBPPL 130.74 (10.41) (63.10) ------19.14 53.01 119.51 (5.42) (6.07) IENMPL 106.99 (137.16) ------4.13 GSPL 15.52 27.76 77.35 15.00 25.27 (1.30) ------ETPL 18.31 21.30 77.53 33.64 58.84 50.95 (25.68) ------11.61 UPPL 0.39 (5.17) 58.30 56.44 (12.32) ------1.97 EEPL 0.68 15.24 86.31 (4.12) (6.28) (0.99) (95.80) ------MPPL 35.53 73.96 292.74 144.94 800.01 634.92 344.96 (128.76) ------0.27 87.25 EOPPL 127.80 (31.91) 318.83 155.02 179.84 (91.33) (52.03) Depr As Curr Def MA Ind A R Dir Pr loss loss above item sale proceeds of the REIT 18(16)(d) as per Regulation Regulations
Profit/(loss) after tax as per statement of profit and of profit tax as per statement after Profit/(loss) (A) (standalone) loss Particulars • • • and impairment amortisation eciation, back off or liabilities written sets written • and of profit as per statement ent tax charge • tax erred • and of profit as per statement T adjustments other in any not considered S adjustments • be settled from debts settled or due to elated • • costs transaction ectly attributable be reinvested or planned to reinvested oceeds Add: Interest on shareholders debt charged to to debt charged on shareholders Interest Add: and loss of profit statement Add: Proceeds from sale of investments, assets assets sale of investments, from Proceeds Add: Entity not or Investment of SPVs or sale of shares re-invest an earlier plan to pursuant to distributed of the REIT Regulations, 18(16)(d) as per Regulation be invested to not intended are if such proceeds subsequently Adjustment: and taxes, Non-cash adjustments Add/(Less): to: including but not limited Add/(Less): Loss/(gain) on sale of investments, on sale of investments, Loss/(gain) Add/(Less): Entity or Investment of SPVs or shares assets Add/(Less): Other adjustments, including but not Other adjustments, Add/(Less): net changes in security deposits, working to limited capital, etc. Add: Proceeds from sale of investments, assets or assets sale of investments, from Proceeds Add: Entity adjusted or Investment of SPVs sale of shares the following for Disclosure pursuantDisclosure SEBI to No. CIR/IMD/DF/146/2016 circular For the quarter ended September 30, 2019 for distribution Sl No 1 3 6 2 4 7 5
140 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report - - - - Total (20.46) 2,903.17 (378.92) 3,900.32 - - - - - 28.33 VCPPL 118.66 226.74 - - - - - 85.18 QBPPL (12.53) 155.00 - - - - - QBPL 187.12 (34.17) 469.10 - - - - - (all amounts(all stated) otherwise unless in ` million OBPPL 113.03 141.47 (24.09) - - - - - 63.23 116.23 IENMPL (33.76) - - - - - GSPL 141.21 113.45 (22.52) - - - - - ETPL 128.37 (28.99) 205.90 - - - - - UPPL (2.03) 119.55 107.23 - - - - EEPL (7.85) (30.31) (31.30) (20.46) - - - - - MPPL 1,198.53 (199.75) 1,998.54 - - - - - EOPPL 652.17 (41.57) 524.37 R Pr way of debt way
Less: Maintenance capex not charged in the not charged capex Maintenance Less: not funded the extent to and loss, of profit statement debt by Particulars • by of the debt in case investments epayment • capital reduction buy-backs/ from oceeds Less: External debt principal repayment * debt principal repayment External Less: Less: Income tax (net of refund) and other taxes paid and other taxes tax (net of refund) Income Less: (as applicable) Add: Cash flow received from SPV and Investment and Investment SPV from received Cash flow Add: the to only, Holdco (applicable for Entity towards above): not covered extent Total Adjustments (B) Adjustments Total Net distributable Cash Flows C = (A+B). Sl No 8 * Repayment of borrowings done at SPV level out of Initial Public Offering and Non-convertible debenture proceedsof short-term have not been construction considered debt for NDCF from Embassy computation. REIT Asset to Further, SPV’s/ repayment Hold Co upon ultimate availment of external credit facilityquarter and interest end are accrued not considered but not due for on NDCF borrowings computation. as at the ** Interest on external debt paid and capitalised development to work in progress, the to extent funded debt, by are not considered for NDCF computation. Distribution of up 90% to of the above NDCF is required as per the REIT Regulations subject compliance to with the requirements of Companies Act, 2013 9 11 Disclosure pursuantDisclosure SEBI to No. CIR/IMD/DF/146/2016 circular 10
Half-Yearly Report 2020-21 141 - - - - - Total (1.86) 41.62 753.67 2,173.57 (275.89) (299.79) 1,897.56 4,064.64 ------(1.13) EPTPL ------73.12 21.35 71.39 14.56 (6.46) VCPPL 281.89 ------11.63 28.69 QBPPL 28.09 (14.52) 147.36 178.30 (25.88) ------(all amounts(all stated) otherwise unless in ` million 1.25 QBPL (91.44) 150.23 764.01 (518.95) ------2.12 8.69 (2.12) (0.41) OBPPL 139.36 (48.30) 258.64 ------52.17 13.06 (4.59) 124.74 (55.53) IENMPL 208.55 208.09 ------GSPL 7.04 81.17 0.42 51.29 44.53 139.25 ------ETPL 19.22 (4.59) 22.32 88.52 215.91 100.75 ------UPPL 0.33 112.37 108.15 (76.44) (214.79) ------1.28 EEPL 172.61 (118.87) (45.49) 376.55 - - - - - MPPL 2.73 417.15 122.18 768.68 (172.35) 1,998.27 (214.05) 1,461.32 ------3.27 EOPPL 99.44 110.06 182.48 (99.44) 269.22 305.07 Depr As Curr Def MA Ind A R Dir Pr impairment back and loss profit and loss profit above other item any sale proceeds settled from 18(16)(d) as per Regulation reinvested of the REIT Regulations
Profit/(loss) after tax as per statement of tax as per statement after Profit/(loss) (A) (standalone) and loss profit Particulars • • and amortisation eciation, • off or liabilities written sets written • of as per statement ent tax charge • tax erred • of as per statement T adjustments in not considered S adjustments • be debts settled or due to elated • • costs transaction ectly attributable be or planned to reinvested oceeds Add: Interest on shareholders debt on shareholders Interest Add: and loss of profit statement to charged Adjustment: and Non-cash adjustments Add/(Less): to: including but not limited taxes, Add/(Less): Loss/(gain) on sale of Loss/(gain) Add/(Less): or of SPVs or shares assets investments, Entity Investment Add: Proceeds from sale of investments, sale of investments, from Proceeds Add: or of SPVs or sale of shares assets the for Entity adjusted Investment following Disclosure pursuantDisclosure SEBI to No. CIR/IMD/DF/146/2016 circular For the half year ended September 30, 2020 pursuant guidance to under Paragraph SEBI 6 to circular No. CIR/IMD/DF/146/2016 Sl No 1 3 2 4 5
142 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report - - - - - Total 287.43 (96.65) (366.35) 8,177.95 6,004.38 ------0.30 0.30 EPTPL (0.83) - - - - - (1.63) 17.68 VCPPL 400.51 471.90 - - - - - 20.82 QBPPL (27.73) 199.40 346.76 - - - - - (all amounts(all stated) otherwise unless in ` million QBPL (35.80) (110.35) 158.95 677.90 - - - - - 29.45 90.76 OBPPL (21.20) 457.40 456.99 - - - - - 22.10 IENMPL (53.09) 515.50 306.95 - - - - - GSPL 27.52 (44.12) 307.10 225.93 - - - - - ETPL (0.25) (56.32) 169.65 385.56 - - - - - 0.16 UPPL (31.67) 112.90 (101.89) - - - - - 5.15 EEPL 22.39 (51.37) 481.12 362.25 - - - - - MPPL 291.86 (24.08) (116.92) 2,536.52 4,534.79 - - - - - EOPPL (84.81) (44.42) 435.80 740.87 R Pr investments by way of debt way by investments reduction
Add: Proceeds from sale of investments, sale of investments, from Proceeds Add: or of SPVs or sale of shares assets Entity not distributed Investment re-invest an earlier plan to pursuant to of the REIT 18(16)(d) as per Regulation not are if such proceeds Regulations, subsequently be invested to intended Particulars • of the debt in case epayment • capital buy-backs/ from oceeds Add/(Less): Other adjustments, including Other adjustments, Add/(Less): net changes in security to but not limited capital, etc. deposits, working Less: Income tax (net of refund) and other tax (net of refund) Income Less: paid (as applicable) taxes Less: Maintenance capex not charged in not charged capex Maintenance Less: the to and loss, of profit the statement debt not funded by extent Add: Cash flow received from SPV and SPV from received Cash flow Add: (applicable for Entity towards Investment not covered the extent to only, Holdco above): Total Adjustments (B) Adjustments Total Less: External debt principal repayment * debt principal repayment External Less: Net distributable Cash Flows C = (A+B). * Repayment of borrowings done at SPV level out of Initial Public Offering and Non-convertible debenture proceedsof short-term have not been construction considered debt for NDCF from Embassy computation. REIT Asset to Further, SPV’s/ repayment Hold Co upon ultimate availment of external credit facilityquarter and interest end are accrued not considered but not due for on NDCF borrowings computation. as at the ** Interest on external debt paid and capitalised development to work in progress, the to extent funded debt, by are not considered for NDCF computation. Distribution of up 90% to of the above NDCF is required as per the REIT Regulations subject compliance to with the requirements of Companies Act, 2013 Sl No 6 7 11 Disclosure pursuantDisclosure SEBI to No. CIR/IMD/DF/146/2016 circular 8 10 9
Half-Yearly Report 2020-21 143 ------5.14 Total 737.71 (11.06) 306.57 1,557.85 3,120.75 3,920.98 (908.28) ------EPTPL ------19.75 45.15 76.23 49.78 VCPPL 20.29 287.56 ------14.18 10.44 22.38 28.59 QBPPL 114.54 187.92 (19.64) ------4.13 (all amounts(all stated) otherwise unless in ` million 9.05 QBPL (0.10) 764.01 1,442.52 (168.24) (1,587.68) ------24.71 45.72 30.55 OBPPL (2.72) 105.29 109.62 232.92 (24.71) ------19.24 82.42 153.51 (0.39) 216.35 134.63 IENMPL (10.37) ------GSPL 11.43 42.77 (1.39) 53.30 63.48 149.27 ------ETPL 0.34 87.91 101.41 23.80 334.52 (31.09) (116.07) ------1.22 UPPL (2.91) 112.66 108.99 (31.57) (90.42) ------EEPL 9.95 6.05 23.36 (0.79) 172.62 283.41 (18.91) ------12.51 MPPL 317.86 (6.43) 258.72 700.66 1,341.43 1,895.25 (526.02) ------1.39 122.11 117.77 EOPPL 515.10 180.16 325.32 (50.08) (207.06) Depr As Curr Def MA Ind A R Dir Pr impairment back and loss of profit and loss profit above other item any sale proceeds settled from 18(16)(d) as per Regulation reinvested of the REIT Regulations
Profit/(loss) after tax as per statement of tax as per statement after Profit/(loss) (A) (standalone) and loss profit Particulars • • and amortisation eciation, • off or liabilities written sets written • as per statement ent tax charge • tax erred • of as per statement T adjustments in not considered S adjustments • be debts settled or due to elated • • costs transaction ectly attributable be or planned to reinvested oceeds Add: Interest on shareholders debt on shareholders Interest Add: and loss of profit statement to charged Add: Proceeds from sale of investments, sale of investments, from Proceeds Add: or of SPVs or sale of shares assets Entity not distributed Investment re-invest an earlier plan to pursuant to of the REIT 18(16)(d) as per Regulation not are if such proceeds Regulations, subsequently be invested to intended Adjustment: and Non-cash adjustments Add/(Less): to: including but not limited taxes, Add/(Less): Loss/(gain) on sale of Loss/(gain) Add/(Less): or of SPVs or shares assets investments, Entity Investment Add: Proceeds from sale of investments, sale of investments, from Proceeds Add: or of SPVs or sale of shares assets the for Entity adjusted Investment following Disclosure pursuantDisclosure SEBI to No. CIR/IMD/DF/146/2016 circular For the half year ended March 31, 2020 pursuant guidance to under Paragraph SEBI 6 to circular No. CIR/IMD/DF/146/2016 Sl No 1 3 6 2 4 5
144 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report - - - - Total (131.12) 969.43 (676.57) 7,333.55 8,891.40 ------EPTPL - - - - - 5.35 VCPPL 419.54 469.32 (34.79) - - - - - 25.28 QBPPL 357.02 242.48 (26.67) - - - - - (all amounts(all stated) otherwise unless in ` million QBPL 10.22 (63.71) 410.20 1,997.88 - - - - 59.02 OBPPL (35.17) 494.33 389.04 (50.90) - - - - - (6.99) IENMPL 390.37 525.00 (63.40) - - - - - GSPL (5.53) 270.17 (43.16) 206.69 - - - - - ETPL 41.40 56.39 (51.31) 390.91 - - - - - UPPL 45.83 (3.55) 140.25 230.67 - - - - EEPL 24.74 (1.20) 425.12 (50.75) 448.48 - - - - MPPL 601.20 (29.47) (295.77) 4,269.94 2,374.69 - - - - - EOPPL 168.91 (57.84) 1,115.78 600.68 R Pr investments by way of debt way by investments reduction
Add/(Less): Other adjustments, including Other adjustments, Add/(Less): net changes in security to but not limited capital, etc. deposits, working Particulars • of the debt in case epayment • capital buy-backs/ from oceeds Less: Income tax (net of refund) and tax (net of refund) Income Less: paid (as applicable) other taxes Less: Maintenance capex not charged in not charged capex Maintenance Less: the to and loss, of profit the statement debt not funded by extent Total Adjustments (B) Adjustments Total Less: External debt principal repayment * debt principal repayment External Less: Net distributable Cash Flows C = (A+B). Add: Cash flow received from SPV and SPV from received Cash flow Add: (applicable for Entity towards Investment not covered the extent to only, Holdco above): Sl No 7 * Repayment of borrowings done at SPV level out of Initial Public Offering and Non-convertible debenture proceedsof short-term have not been construction considered debt for NDCF from Embassy computation. REIT Asset to Further, SPV’s/ repayment Hold Co upon ultimate availment of external credit facilityquarter and interest end are accrued not considered but not due for on NDCF borrowings computation. as at the ** Interest on external debt paid and capitalised development to work in progress, the to extent funded debt, by are not considered for NDCF computation. Distribution of up 90% to of the above NDCF is required as per the REIT Regulations subject compliance to with the requirements of Companies Act, 2013. 11 8 Disclosure pursuantDisclosure SEBI to No. CIR/IMD/DF/146/2016 circular 9 10
Half-Yearly Report 2020-21 145 - - - - - Total 4.96 529.68 239.98 (223.11) 1,731.24 (141.84) 3,431.54 1,964.94 ------EPTPL ------19.88 VCPPL 70.98 131.86 294.61 (154.41) - - - - - 10.10 28.70 24.94 QBPPL (3.45) (18.15) 195.54 125.04 - - - - - (all amounts(all stated) otherwise unless in ` million 0.10 QBPL 43.98 (3.00) 154.03 742.85 (49.93) (513.63) - - - - - 18.78 37.30 48.54 112.69 OBPPL (15.73) (18.78) 250.49 ------65.21 66.20 198.03 (12.72) IENMPL (21.58) 298.02 ------3.82 GSPL 61.26 36.42 44.97 (2.09) 155.94 ------ETPL 34.61 (9.21) 42.33 33.64 99.64 127.92 ------1.14 UPPL 111.77 119.27 (12.73) (60.73) ------9.21 EEPL 8.96 0.68 20.91 172.62 (0.49) - - - - - MPPL 20.31 226.01 689.47 343.30 1,480.11 1,078.89 (255.66) - - - - - 5.18 4.96 97.81 EOPPL 174.55 360.41 243.76 (18.69) (39.37) Depr As Curr Def MA Ind A R Dir Pr impairment back and loss profit and loss profit above other item any sale proceeds settled from 18(16)(d) as per Regulation reinvested of the REIT Regulations
Profit/(loss) after tax as per statement of tax as per statement after Profit/(loss) (A) (standalone) and loss profit Particulars • • and amortisation eciation, • off or liabilities written sets written • of as per statement ent tax charge • tax erred • of as per statement T adjustments in not considered S adjustments • be debts settled or due to elated • • costs transaction ectly attributable be or planned to reinvested oceeds Adjustment: and Non-cash adjustments Add/(Less): to: including but not limited taxes, Add: Interest on shareholders debt on shareholders Interest Add: and loss of profit statement to charged Add/(Less): Loss/(gain) on sale of Loss/(gain) Add/(Less): or of SPVs or shares assets investments, Entity Investment Add: Proceeds from sale of investments, sale of investments, from Proceeds Add: or of SPVs or sale of shares assets the for Entity adjusted Investment following Disclosure pursuantDisclosure SEBI to No. CIR/IMD/DF/146/2016 circular For the half year ended September 30, 2019 pursuant guidance to under Paragraph SEBI 6 to circular No. CIR/IMD/DF/146/2016 Sl No 1 2 3 4 5
146 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report - - - - - Total 1,503.63 8,051.55 (284.77) 6,320.31 (704.70) ------EPTPL ------10.70 VCPPL 207.17 339.03 (34.59) ------(9.61) QBPPL 201.54 326.58 (26.53) ------(all amounts(all stated) otherwise unless in ` million QBPL 165.47 984.52 470.88 (68.98) ------49.68 OBPPL 387.44 435.98 (46.99) ------415.15 IENMPL 348.95 (72.63) (105.38) ------GSPL 66.79 326.18 264.92 (40.93) ------ETPL 139.96 417.69 289.77 (51.20) ------UPPL (5.32) (3.83) 149.57 210.30 - - - - - EEPL 95.38 244.16 223.25 (42.73) (20.38) - - - - - MPPL 644.97 (314.78) (242.04) 3,670.58 2,190.47 ------EOPPL (69.15) 496.28 1,255.74 1,011.98 R Pr investments by way of debt way by investments reduction
Add: Proceeds from sale of investments, sale of investments, from Proceeds Add: or of SPVs or sale of shares assets Entity not distributed Investment re-invest an earlier plan to pursuant to of the REIT 18(16)(d) as per Regulation not are if such proceeds Regulations, subsequently be invested to intended Particulars • of the debt in case epayment • capital buy-backs/ from oceeds Add/(Less): Other adjustments, including Other adjustments, Add/(Less): net changes in security to but not limited capital, etc. deposits, working Less: Income tax (net of refund) and other tax (net of refund) Income Less: paid (as applicable) taxes Less: Maintenance capex not charged in not charged capex Maintenance Less: the to and loss, of profit the statement debt not funded by extent Total Adjustments (B) Adjustments Total Less: External debt principal repayment * debt principal repayment External Less: Net distributable Cash Flows C = (A+B). Add: Cash flow received from SPV and SPV from received Cash flow Add: (applicable for Entity towards Investment not covered the extent to only, Holdco above): * Repayment of borrowings done at SPV level out of Initial Public Offering and Non-convertible debenture proceedsof short-term have not been construction considered debt for NDCF from Embassy computation. REIT Asset to Further, SPV’s/ repayment Hold Co upon ultimate availment of external credit facilityquarter and interest end are accrued not considered but not due for on NDCF borrowings computation. as at the ** Interest on external debt paid and capitalised development to work in progress, the to extent funded debt, by are not considered for NDCF computation. Distribution of up 90% to of the above NDCF is required as per the REIT Regulations subject compliance to with the requirements of Companies Act, 2013. Sl No 6 7 Disclosure pursuantDisclosure SEBI to No. CIR/IMD/DF/146/2016 circular 11 8 9 10
Half-Yearly Report 2020-21 147 ------Total (6.10) 546.55 (217.97) 1,267.39 7,352.52 3,289.09 5,085.69 (1,050.12) ------EPTPL ------147.21 VCPPL 20.29 65.03 181.64 582.17 (134.66) ------10.73 57.29 47.32 20.54 QBPPL 239.58 (37.79) 383.46 ------(all amounts(all stated) otherwise unless in ` million 6.05 48.11 QBPL (218.17) 1,596.55 1,506.86 (2,101.31) ------14.82 83.02 43.49 OBPPL (2.72) 222.31 153.83 483.41 (43.49) ------6.52 147.63 (0.39) 451.53 414.38 IENMPL (31.95) 200.83 ------GSPL 15.25 87.74 89.72 124.74 (3.48) 305.21 ------ETPL 66.13 33.98 122.52 201.05 462.44 (116.07) (40.30) ------2.36 UPPL (2.91) 231.93 220.76 (151.15) (44.30) ------EEPL 9.95 15.26 (1.28) 44.27 (9.95) 345.24 284.09 ------MPPL 32.82 661.16 (6.43) 484.73 1,390.13 (781.68) 3,375.36 2,420.32 ------6.35 EOPPL 122.95 354.71 103.42 685.73 758.86 (89.45) (109.25) Pr Dir R Depr As Curr Def MA Ind A be reinvested as per Regulation as per Regulation be reinvested of the REIT Regulations 18(16)(d) costs settled from sale proceeds settled from impairment back written and loss of profit and loss of profit above other item in any
Profit/(loss) after tax as per statement tax as per statement after Profit/(loss) (A) (standalone) and loss of profit Particulars • or planned to reinvested oceeds • transaction ectly attributable • be debts settled or due to elated • • and amortisation eciation, • off or liabilities sets written • as per statement ent tax charge • tax erred • as per statement T adjustments not considered S adjustments Adjustment: and Non-cash adjustments Add/(Less): to: including but not limited taxes, Add: Proceeds from sale of investments, sale of investments, from Proceeds Add: or of SPVs or sale of shares assets Entity not distributed Investment re-invest an earlier plan to pursuant to of the REIT 18(16)(d) as per Regulation not are if such proceeds Regulations, subsequently be invested to intended Add: Interest on shareholders debt on shareholders Interest Add: and loss of profit statement to charged Add/(Less): Loss/(gain) on sale of Loss/(gain) Add/(Less): or of SPVs or shares assets investments, Entity Investment Add: Proceeds from sale of investments, sale of investments, from Proceeds Add: or of SPVs or sale of shares assets the for Entity adjusted Investment following Disclosure pursuantDisclosure SEBI to No. CIR/IMD/DF/146/2016 circular For the year ended March 31, 2020 pursuant guidance to under Paragraph SEBI 6 to circular No. CIR/IMD/DF/146/2016 Sl No 1 2 6 3 4 5
148 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report - - - Total (415.89) 2,473.06 (1,381.27) 13,653.86 16,942.95 ------EPTPL - - - - VCPPL 626.71 808.35 (29.24) (24.09) - - - - 15.67 QBPPL 683.60 (53.20) 444.02 - - - - (all amounts(all stated) otherwise unless in ` million Sd/- Parikh Tuhin Director DIN: 00544890 Mumbai Place: 2, 2020 November Date: QBPL 175.69 881.09 (132.69) 2,982.40 - - - OBPPL 108.70 930.31 (82.16) 776.48 (50.90) - - - - IENMPL 940.15 739.32 (112.37) (136.03) - - - - GSPL 61.26 471.61 Jitendra Virwani Jitendra Director DIN: 00027674 Bengaluru Place: 2, 2020 November Date: for and on behalf of the Board of Directors of of Directors and on behalf of the Board for Limited Private Management Services Parks Office Embassy REIT) Parks Office the Embassy (as Manager to Sd/- 596.35 (84.09) - - - - ETPL 181.36 346.16 808.60 (102.51) - - - - UPPL 40.51 (7.38) 289.82 440.97 - - - EEPL 120.12 (21.58) 648.37 692.64 (93.48) - - - MPPL (271.51) 1,246.17 (610.55) 7,940.52 4,565.16 - - - - EOPPL 665.19 (126.99) 2,371.52 1,612.66 Pr R reduction investments by way of debt way by investments
Add/(Less): Other adjustments, Other adjustments, Add/(Less): net changes to including but not limited capital, etc. in security deposits, working Particulars • capital buy-backs/ from oceeds • of the debt in case epayment Less: Maintenance capex not charged in not charged capex Maintenance Less: the to and loss, of profit the statement debt not funded by extent Less: Income tax (net of refund) and tax (net of refund) Income Less: paid (as applicable) other taxes Less: External debt principal repayment * debt principal repayment External Less: Total Adjustments (B) Adjustments Total Add: Cash flow received from SPV and SPV from received Cash flow Add: (applicable Entity towards Investment not the extent to only, Holdco for above): covered Net distributable Cash Flows C = (A+B). Adarsh Ranka Adarsh Partner Membership number: 209567 Bengaluru Place: 2, 2020 November Date: * Repayment of borrowings done at SPV level out of Initial Public Offering and Non-convertible debenture proceedsof short-term have not been construction considered debt for NDCF from Embassy computation. REIT Asset to Further, SPV’s/ repayment Hold Co upon ultimate availment of external credit facilityyear end and are interest not considered accrued for but NDCF not due on computation. borrowings as at the ** Interest on external debt paid and capitalised development to work in progress, the to extent funded debt, by are not considered for NDCF computation. Distribution of up 90% to of the above NDCF is required as per the REIT Regulations subject compliance to with the requirements of Companies Act, 2013 attached date of even As per our report LLP & Associates S R Batliboi for Accountants Chartered number: 101049W/E300004 ICAI firm's registration Sd/- Sl No 7 8 Disclosure pursuantDisclosure SEBI to No. CIR/IMD/DF/146/2016 circular 11 9 10
Half-Yearly Report 2020-21 149 Notes to the Condensed Consolidated Financial Statements
1. ORGANISATION STRUCTURE Sponsors’) have set up the Embassy Office Parks The interim condensed consolidated financial REIT as an irrevocable trust, pursuant to the Trust statements (‘Condensed Consolidated Financial Deed, under the provisions of the Indian Trusts Statements’) comprise condensed financial Act, 1882 and the Trust has been registered with statements of Embassy Office Parks REIT (the SEBI as a Real Estate Investment Trust on August ‘Trust’ or the ‘Embassy REIT’ or the ‘REIT’), 3, 2017 under Regulation 6 of the Securities and its subsidiaries namely Embassy Office Parks Exchange Board of India (Real Estate Investment Private Limited (‘EOPPL’), Manyata Promoters Trusts) Regulations, 2014. The Trustee to Embassy Private Limited (‘MPPL’), Umbel Properties Private Office Parks REIT is Axis Trustee Services Limited Limited (‘UPPL’), Embassy Energy Private Limited (the ‘Trustee’) and the Manager for Embassy Office (‘EEPL’), Galaxy Square Private Limited (‘GSPL’), Parks REIT is Embassy Office Parks Management Quadron Business Park Private Limited (‘QBPL’), Services Private Limited (the ‘Manager’ or Qubix Business Park Private Limited (‘QBPPL’), ‘EOPMSPL’). Oxygen Business Park Private Limited (‘OBPPL’), Earnest Towers Private Limited (‘ETPL’), Vikhroli Embassy Office Parks REIT acquired the following Corporate Park Private Limited (‘VCPPL’), Indian SPVs by acquiring all the equity interest held by Express Newspapers (Mumbai) Private Limited the Embassy Sponsor, Blackstone Sponsor and (‘IENMPL’) and Embassy Pune Techzone Private Blackstone Sponsor Group and certain other Limited (‘EPTPL’) (individually referred to as shareholders on 22 March 2019. In exchange for ‘Special Purpose Vehicle’ or ‘SPV’ and together these equity interests, the above shareholders referred to as ‘Embassy Office Parks Group’) and have been allotted 613,332,143 Units of Embassy a Joint Venture namely Golflinks Software Park Office Parks REIT valued at ` 300 each. These Private Limited (‘GLSP’) (also referred to as the Units were subsequently listed on the National Investment Entity). The SPVs are Companies Stock Exchange (NSE) and Bombay Stock domiciled in India. Exchange (BSE) on April 1, 2019.
The objectives of Embassy REIT are to undertake The Trust went public as per its plan for Initial activities in accordance with the provisions of the Public Offer of Units after obtaining the required SEBI REIT Regulations and the Trust Deed. The approvals from the relevant authorities. The Units principal activity of Embassy REIT is to own and were allotted to the applicants on 27 March 2019 invest in rent or income generating real estate and were subsequently listed on the BSE and NSE and related assets in India with the objective of on April 1, 2019. producing stable and sustainable distributions to Unitholders. Accordingly, the equity interest in each of the following SPVs (directly or indirectly, through their Embassy Property Developments Private Limited holding companies) have been transferred from (‘EPDPL’) and BRE/Mauritius Investments (‘BMI’) the respective shareholders to the Trust. (collectively known as the ‘Sponsors’ or the ‘Co-
Details of SPVs is provided below: Name of the SPV Activities Shareholding (in percentage) EOPPL Development and leasing of office space and related interiors Embassy Office Parks REIT : 100% (Embassy Tech Zone), located at Pune along with being an intermediate Embassy Office Parks holding company (Hold Co.) for the Embassy Office Parks Group. MPPL Development and leasing of office space and related interiors EOPPL : 35.77% (Embassy Manyata), located at Bangalore. Embassy Office Parks REIT : 64.23% UPPL Development, rental and maintenance of serviced residences Embassy Office Parks REIT : 100% (Hilton hotel). EEPL Generation and supply of solar power mainly to the office EOPPL: 80% spaces of Embassy Office Parks Group located in Bangalore. Embassy Office Parks REIT : 20% GSPL Development and leasing of office space and related interiors Embassy Office Parks REIT : 100% and maintenance of such assets (Embassy Galaxy), located in Noida.
150 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
Name of the SPV Activities Shareholding (in percentage) QBPL Development and leasing of office space and related interiors Embassy Office Parks REIT : 100% and maintenance of such assets (Quadron Business Park), located in Pune and (Embassy one) located in Bangalore Development, rental and maintenance of serviced residences (Hotel Four Seasons at Embassy One), located in Bangalore QBPPL Development and leasing of office space and related interiors Embassy Office Parks REIT : 100% and maintenance of such assets (Embassy Qubix), located in Pune. OBPPL Development and leasing of office space and related interiors Embassy Office Parks REIT : 100% and maintenance of such assets (Embassy Oxygen), located in Noida. ETPL Development and leasing of office space and related interiors Embassy Office Parks REIT : 100% and maintenance of such assets (First International Financial Centre), located in Mumbai. VCPPL Development and leasing of office space and related interiors Embassy Office Parks REIT : 100% and maintenance of such assets (Embassy 247), located in Mumbai. IENMPL Development and leasing of office space and related interiors Embassy Office Parks REIT : 100% and maintenance of such assets (Express Towers), located in Mumbai.
The Trust, further has the following subsidiary incorporated/ acquired post IPO:- EPTPL Development and leasing of office space and related interiors, Embassy Office Parks Private Limited located in Pune. (100%)
The Trust also holds economic interest in a joint venture (Golflinks Software Park Private Limited (GLSP), entity incorporated in India through a SPV as detailed below: Name of the SPV Activities Shareholding (in percentage) GLSP Development and leasing of office space and related interiors Embassy Office Parks Private Limited (Embassy Golflinks Business Park), located at Bangalore. (50%) Kelachandra Holdings LLP (50%)
2. SIGNIFICANT ACCOUNTING POLICIES prepared in accordance with the requirements of 2.1 Basis of preparation of Condensed SEBI (Real Estate Investment Trusts) Regulations, Consolidated Financial Statements 2014, as amended from time to time read including The Condensed Consolidated Financial any guidelines and circulars issued thereunder Information (hereinafter referred to as the read with SEBI Circular No. CIR/IMD/DF/146/2016 “Condensed Consolidated Financial Statements”) dated December 29, 2016 (“the REIT regulations”); of the Embassy Office Parks Group comprises Indian Accounting Standard (Ind AS) 34 “Interim the Consolidated Balance Sheet and the Financial Reporting”, as prescribed in Rule 2(1)(a) Statement of Net Assets as at September 30, of the Companies (Indian Accounting Standards) 2020, the Consolidated Statement of Profit and Rules, 2015 (as amended) and other accounting Loss, including other comprehensive income, principles generally accepted in India, to the extent the Consolidated Statement of Cash Flow, the not inconsistent with REIT regulations. Also, refer Statement of Net Distributable Cashflows of Note 21(a) on classification of Unitholders fund. Embassy REIT and each of the SPVs for the quarter and half year ended September 30, The Condensed Consolidated Financial Statements 2020, the Consolidated Statement of Changes are presented in Indian Rupees in Millions, except in Unitholders’ Equity, the Consolidated when otherwise indicated. Statement of Total Returns at fair value and a summary of significant accounting policies and Statement of compliance to Ind-AS other explanatory information for the half year “These Condensed Consolidated Financial ended September 30, 2020. The Condensed Statements for the half year ended September 30, Consolidated Financial Statements were approved 2020 are the financial statements of the Embassy for issue in accordance with resolution passed by Office Parks Group and have been prepared in the Board of Directors of the Manager on behalf accordance with Indian Accounting Standards of the Trust on November 2, 2020. The Condensed (Ind AS) 34 “Interim Financial Reporting” as Consolidated Financial Statements have been prescribed in Rule 2(1)(a) of the Companies (Indian
Half-Yearly Report 2020-21 151 Notes to the Condensed Consolidated Financial Statements
Accounting Standards) Rules, 2015 (as amended), line-by-line basis and intragroup balances to the extent not inconsistent with REIT regulations. and transactions for assets and liabilities, The Group has followed the same accounting equity, income, expenses and cash flows policies in preparation of the condensed between entities of the Embassy Office consolidated financial statements as those Parks Group are eliminated in full upon followed in preparation of the annual consolidated consolidation. financial statements as at and for the year ended March 31, 2020. These condensed consolidated d) Non-controlling interests in the financial statements should be read in conjunction net assets (excluding goodwill) of with the audited consolidated financial statements consolidated subsidiaries are identified and the related notes for the year ended March separately from the equity attributable 31, 2020.” to shareholders of the Company. The interest of non-controlling shareholders The Condensed Consolidated Financial Statements may be initially measured either at fair have been prepared using uniform accounting value or at the non-controlling interests’ policies for like transactions and other events in proportionate share of the fair value of similar circumstances. The financial statements of the acquiree’s identifiable net assets. The all the SPVs and the Trust used for the purpose of choice of measurement basis is made on consolidation are drawn up to the same reporting an acquisition-by-acquisition basis. date i.e. half year ended on September 30, 2020. (ii) Interests in joint arrangements Basis of Consolidation A joint arrangement is an arrangement of ) (i Subsidiaries which two or more parties have joint control. The Embassy Office Parks Group consolidates Joint control is the contractually agreed entities which it owns or controls. The sharing of control of an arrangement, which Condensed Consolidated Financial exists only when decisions about the relevant Statements comprise the financial statements activities require the unanimous consent of of the Embassy Office Parks REIT and its the parties sharing control. subsidiary SPVs as disclosed in Note 1. Control exists when the parent has power over the A joint venture is a joint arrangement entity, is exposed, or has rights, to variable whereby the parties that have joint control returns from its involvement with the entity of the arrangement have rights to the net and has the ability to affect those returns assets of the arrangement. The results of joint by using its power over the entity. Power is ventures are incorporated in these condensed demonstrated through existing rights that consolidated financial statements using the give the ability to direct relevant activities, equity method of accounting as described those which significantly affect the entity’s below. returns. Subsidiaries are consolidated from the date control commences until the date Under the equity method of accounting, control ceases. the investments are initially recognised at cost on the date of acquisition and adjusted The procedure for preparing Condensed thereafter to recognize the Embassy Office Consolidated Financial Statements of the Parks Group’s share of the post-acquisition Embassy Office Parks Group are stated profits or losses of the investee in profit below: and loss, and Embassy Office Parks Group’s share of other comprehensive income of the a) The Condensed Consolidated Financial investee in other comprehensive income. Statements have been prepared using the principles of consolidation as per Ind AS Goodwill is calculated at excess of cost of 110 – Consolidated Financial Statements, investment over share of fair value of net to the extent applicable. assets acquired on the date of acquisition and is disclosed as an additional information b) Goodwill is recognised in the Condensed in the Notes to the Condensed Consolidated Consolidated Financial Statements at the Financial Statements. excess of cost of investment over share of fair value of net assets acquired on the Dividends received or receivable from joint date of acquisition. ventures are recognised as a reduction in the carrying amount of the investment. c) The financial statements of the Embassy Office Parks Group are consolidated on a
152 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
When Embassy Office Parks Group’s share control are accounted at historical cost. The of losses in an equity-accounted investment difference between any consideration given equals or exceeds its interest in the entity, and the aggregate historical carrying amounts including any other unsecured long-term of assets and liabilities of the acquired entity receivables, Embassy Office Parks Group is recorded in Unitholders’ equity. does not recognize further losses, unless it has incurred obligations or made payments 2.2 Summary of significant accounting policies on behalf of the other entity. ) a Functional and presentation currency The Condensed Consolidated Financial Unrealised gains on transactions between Statements are presented in Indian Rupees, Embassy Office Parks Group and joint which is the Embassy Office Parks Group’s ventures are eliminated to the extent of functional currency and the currency of the Embassy Office Parks Group’s interest in primary economic environment in which these entities. Unrealised losses are also the Embassy Office Parks Group operates. eliminated unless the transaction provides All financial information presented in Indian evidence of an impairment of the asset Rupees has been rounded off to nearest transferred. Accounting policies of equity million except unit and per unit data. accounted investees are consistent with the policies adopted by the Embassy Office Parks ) b Basis of measurement Group. The Condensed Consolidated Financial Statements are prepared on the historical The carrying amount of equity accounted cost basis, except for the following: investments are tested for impairment in accordance with the Embassy Office Parks − - Certain financial assets and liabilities Group’s policy. (refer accounting policy regarding financial instrument): measured at fair Basis of Business Combination values; The Embassy Office Parks Group accounts for − - Net defined benefit (asset)/ liability less its business combinations under acquisition present value of defined obligations: Fair method of accounting. Acquisition related value of plan assets less present value of costs are recognised in the condensed defined benefit plan; and consolidated statement of profit and loss as incurred. The acquiree’s identifiable assets, − - The assets and liabilities of the SPVs liabilities and contingent liabilities that meet on the date of acquisition have been the condition for recognition are recognised accounted using their Fair value and the at their fair values at the acquisition date. goodwill / capital reserve amount has been calculated accordingly. Purchase consideration paid in excess of the fair value of net assets acquired is ) c Use of judgments and estimates The preparation of Condensed Consolidated recognised as goodwill. Where the fair value Financial Statements in conformity with of identifiable assets and liabilities exceed generally accepted accounting principles in the cost of acquisition, after reassessing the India (Ind AS) requires management to make fair values of the net assets and contingent estimates and assumptions that affect the liabilities, the excess is recognised as capital reported amounts of assets, liabilities, income reserve. and expenses. Actual results could differ from those estimates. The interest of non-controlling shareholders is initially measured either at fair value or at the Estimates and underlying assumptions are non-controlling interests’ proportionate share reviewed on a periodic basis. Revisions to of the acquiree’s identifiable net assets. The accounting estimates are recognised in the choice of measurement basis is made on an period in which the estimates are revised and acquisition-by-acquisition basis. Subsequent in any future periods affected. to acquisition, the carrying amount of non- controlling interests is the amount of those Information about critical judgements in interests at initial recognition plus the non- applying accounting policies that have controlling interests’ share of subsequent the most significant effect on the amounts changes in equity of subsidiaries. recognised in the Condensed Consolidated Financial Statements is included in the Business combinations arising from transfers following notes: of interests in entities that are under common
Half-Yearly Report 2020-21 153 Notes to the Condensed Consolidated Financial Statements
i) Business combinations vi) Judgements in preparing Condensed Consolidated Financial Statements - In accounting for business combinations, Note 2.1 judgment is required in identifying whether an identifiable intangible asset is vii) Classification of Unitholders’ funds - Note to be recorded separately from goodwill. 21 (a) Estimating the acquisition date fair value of the identifiable assets acquired, Information about assumptions and useful life thereof and liabilities assumed estimation uncertainties that have a involves management judgment. These significant risk resulting in a material measurements are based on information adjustment during the half year ended available at the acquisition date and are September 30, 2020 is included in the based on expectations and assumptions following notes: that have been deemed reasonable by the management. Changes in these (i) “Fair valuation and disclosures and judgments, estimates and assumptions impairment of non-financial assets being can materially affect the results of investment properties and property operations. plant and equipment - The fair value of investment properties and property, ii) Impairment of goodwill and intangible plant and equipment are reviewed assets with infinite useful life regularly by management with reference to independent property valuations and For the purpose of impairment testing, market conditions existing at half yearly goodwill and intangible assets with basis. The independent valuers are infinite useful life acquired in a business independent appraisers with a recognised combination is, from the acquisition and relevant professional qualification date, allocated to each of the Embassy and with recent experience in the Office Parks Group’s cash-generating location and category of the investment units that are expected to benefit from property being valued. Judgment is also the combination. In performing such applied in determining the extent and impairment assessments, management frequency of independent appraisals. compared the carrying value of each of SEBI Circulars issued under the REIT the identifiable cash generating units Regulations require disclosures relating (“CGUs”) to which goodwill and such to net assets at fair value and total intangible assets had been allocated with returns at fair value (Refer Statement of their respective ‘value in use’ computed net assets at fair value and Statement based on discounted cash flow method, of total returns at fair value for details). to determine if any impairment loss Refer note 2.2 (j) as regards estimates should be recognized. The discounted and assumptions involved in impairment cash flow method involves estimating assessment of non-financial assets being future cash flows, growth rates and investment properties and property plant discount rates which require significant and equipment.” management judgement - Note 2.2 (j) (ii) Useful lives of Investment Property and iii) Classification of lease arrangements as Property, Plant and Equipment–Notes finance lease or operating lease - Note 2.2(f) and (g) 2.2 (q) (iii) Valuation of financial instruments –Note iv) Classification of assets as investment 2.2 (l) property or as property, plant and equipment - Notes 2.2 (f) and (g) (iv) Recognition of deferred tax asset on carried forward losses and recognition of v) Significant judgement involved in the minimum alternate tax credit: availability purchase price allocation of the assets of future taxable profit against which tax acquired and liabilities assumed on losses carried forward can be used- Note account of Business Combination and 2.2(u)(ii). Further, significant judgements deferred tax accounting on the resultant are involved in determining the provision fair value accounting– Note on Basis for income taxes, including recognition of Business Combination and Note 2.2 of minimum alternate tax credit, in SPVs (u) (ii) entitled for tax deduction under Section
154 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
80IAB of the Income Tax Act, 1961, - Cash or cash equivalent unless restricted wherein the tax deduction is dependent from being exchanged or used to settle upon necessary details available for a liability for at least twelve months after exempt and non-exempt income. the reporting period.
(v) Uncertainty relating to the global health All other assets are classified as non-current. pandemic on COVID-19: The Group has considered the possible effects that A liability is current when: may result from the pandemic relating - It is expected to be settled in normal to COVID-19 on revenue recognition, operating cycle; the carrying amounts of goodwill, investment property (including under - It is held primarily for the purpose of development), property, plant and trading; equipment, capital work in progress, - It is due to be settled within twelve equity accounted investee, intangible months after the reporting period; or assets and receivables. In developing the assumptions relating to the possible - There is no unconditional right to defer future uncertainties in the global the settlement of the liability for at least economic conditions because of this twelve months after the reporting period. pandemic, the Group, as at the date of approval of these financial statements The Embassy Office Parks Group classifies all has used internal and external sources other liabilities as non-current. of information including reports from International Property Consultants Deferred tax assets and liabilities are classified and related information, economic as non-current assets and liabilities. forecasts and consensus estimates from market sources on the expected future The operating cycle is the time between the performance of the Group, and have acquisition of assets for processing and their compared the actual performance with realisation in cash and cash equivalents. The the projections and expects the carrying Embassy Office Parks Group has identified amount of these assets as reflected in the twelve months as its operating cycle. balance sheet as at September 30, 2020 will be recovered. The management ) e Measurement of fair values has also estimated the future cash A number of the Embassy Office Parks flows with the possible effects that may Group accounting policies and disclosures result from the COVID-19 pandemic and require the measurement of fair values, for does not foresee any adverse impact both financial and non-financial assets and on realising its assets and in meeting liabilities. Fair value is the price that would its liabilities as and when they fall due. be received to sell an asset or paid to transfer The impact of COVID-19 on the Group’s a liability in an orderly transaction between financial statements may differ from that market participants at the measurement date. estimated as at the date of approval of The fair value measurement is based on the these condensed consolidated financial presumption that the transaction to sell the statements. asset or transfer the liability takes place either: ) d Current versus non-current classification - In the principal market for the asset or The Embassy Office Parks Group presents liability; or assets and liabilities in the Condensed Consolidated Balance Sheet based on - In the absence of a principal market, in current/ non-current classification: the most advantageous market for the Asset or liability. An asset is treated as current when it is: The principal or the most advantageous - Expected to be realised or intended to market must be accessible by the Embassy be sold or consumed in normal operating Office Parks Group. The fair value of an asset cycle; or a liability is measured using the assumptions - Held primarily for the purpose of trading; that market participants would use when pricing the asset or liability, assuming that - Expected to be realised within twelve market participants act in their economic months after the reporting period; or best interest.
Half-Yearly Report 2020-21 155 Notes to the Condensed Consolidated Financial Statements
A fair value measurement of a non-financial classified as investment property. Investment asset takes into account a market participant’s property is measured initially at its cost, ability to generate economic benefits by including related transaction costs and where using the asset in its highest and best use or applicable borrowing costs. Subsequent by selling it to another market participant that expenditure is capitalised to the asset’s would use the asset in its highest and best carrying amount only when it is probable use. that future economic benefits associated with the expenditure will flow to the Embassy The Embassy Office Parks Group uses Office Parks Group and the cost of the valuation techniques that are appropriate in item can be measured reliably. The cost of the circumstances and for which sufficient the assets not ready for their intended use data are available to measure fair value, before such date, are disclosed as investment maximising the use of relevant observable property under development. All other inputs and minimising the use of unobservable repairs and maintenance costs are expensed inputs. when incurred. When part of an investment property is replaced, the carrying amount of The Embassy Office Parks Group has an such replaced position is derecognised. established control framework with respect to the measurement of fair values. The Embassy Investment properties are depreciated on Office Parks Group engages with external straight-line method over their estimated valuers for measurement of fair values in the useful lives. However, where the management’s absence of quoted prices in active markets. estimate of the remaining useful life of the assets on a review subsequent to the time of While measuring the fair value of an asset or acquisition is different, then depreciation is liability, the Embassy Office Parks Group uses provided over the remaining useful life based market observable data as far as possible. Fair on the revised useful life. The residual values, values are categorised into different levels in useful lives and methods of depreciation a fair value hierarchy based on inputs used in are reviewed at each financial year end and the valuation techniques as follows- adjusted prospectively. - Level 1: Quoted prices (unadjusted) in Pursuant to this policy, Management’s active markets for identical assets or estimates of useful life of the following major liabilities. assets under straight-line method are as - Level 2: Inputs other than quoted prices follows: included in Level 1 that are observable for the asset or liability, either directly (i.e. Estimated useful life Asset category as prices) or indirectly (i.e. derived from (in years) prices). Buildings 60 years - Level 3: inputs for the asset or liability Plant and Machinery 15 years that are not based on observable market Furniture and Fixtures 12 years data (unobservable inputs). Electrical Equipment 15 years Leasehold land* 30 - 99 years based on the When measuring the fair value of an asset or a primary lease period liability, the Embassy Office Parks Group uses observable market data as far as possible. If Pro-rata depreciation is provided on the inputs used to measure the fair value of properties purchased or sold during the year. an asset or a liability fall into different levels of the fair value hierarchy, then the fair value *Upfront premium paid under lease-cum- measurement is categorised in its entirety sale agreements to acquire land where the in the same level of the fair value hierarchy Embassy Office Parks Group has an option to as the lowest level input that is significant to purchase the land at the end of/ during the the entire measurement. The Embassy Office lease term are not amortised over the lease Parks Group recognises transfers between period. levels of the fair value hierarchy at the end of the reporting period during which the change Investment property acquired on Business has occurred. Combination is depreciated over the remaining useful life from the date of acquisition as ) f Investment property certified by the technical valuer. Property that is held for long-term rental yields or for capital appreciation or both is
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Notes to the Condensed Consolidated Financial Statements
Note: Plant and machinery, furniture and because it satisfies either of the following two fixtures and electrical equipment which tests: are physically attached to the building are - It arises from legal rights (a trademark is considered as part of the investment property. essentially a bundle of rights) g) Property, plant and equipment and - It is capable of being sold, transferred, intangible assets and licensed separately from other assets Property, plant and equipment are carried of the acquiring company at cost of acquisition or construction less accumulated depreciation. The cost of The recognition of an acquired trademark property, plant and equipment includes is performed as part of a purchase price freight, duties, taxes and other incidental allocation, whereby a portion of the price expenses related to the acquisition or paid by the acquirer for all of the acquired construction of the respective assets. The cost assets is assigned to the trademark using an of such assets not ready for their intended use acceptable valuation methodology. are disclosed as capital work-in-progress. The life of the Right to use trademark is Intangible assets are recorded at their considered indefinite because there is no acquisition cost. The cost of intangible foreseeable limit nor any specific covenant assets acquired in a business combination that limits the time period over which the is their fair value at the date of acquisition. asset is expected to generate net cash inflows Following initial recognition, intangible assets for the SPVs. are carried at cost less any accumulated amortisation and accumulated impairment Intangible assets comprising of Right to use losses. trademark with indefinite useful lives are not amortised, but are tested for impairment Depreciation is provided on the straight-line annually, at the cash-generating unit level. basis over the estimated useful lives of each The assessment of indefinite life is reviewed component of an item of property, plant and annually to determine whether the indefinite equipment and intangibles as follows: life continues to be supportable. If not, the change in useful life from indefinite to finite Estimated useful life is made on a prospective basis. Asset category (in years) Buildings 60 years Power purchase agreement is one of the Plant and Machinery 15 years essential contracts required for a small power generating company with limited production Furniture and Fixtures 12 years capacity and marketability. Since sales with Electrical Equipment 15 years the customer take the form of a contract, Office Equipment 5 years the power purchase agreement meets the Computers 3 years contractual criteria for recognition. This Computer Software 3 years agreement provides ongoing and repeat Operating Supplies 2-5 years business for the company and provides a platform for the company to reach Vehicles 8 years profitability. Upfront premium paid under lease-cum- The initial useful life of the power purchase sale agreements to acquire land where the agreements is estimated to be 25 years Embassy Office Parks Group has an option to based on the contract period and hence are purchase the land at the end of/ during the amortised over the useful economic life and lease term are not amortised over the lease assessed for impairment whenever there is period. an indication that the intangible asset may be impaired. The amortisation period and the The useful lives of intangible assets are amortisation method for an intangible asset assessed as either finite or indefinite. with a finite useful life are reviewed at least at the end of each reporting period. Right to use trademark: The earnings potential of trade name/ trademark can at times be Property, plant and equipment and Intangibles substantial. A trademark is recognized on acquired on Business Combination, except a reporting company’s balance sheet as right-to-use trademark, is depreciated over an intangible asset separate from goodwill
Half-Yearly Report 2020-21 157 Notes to the Condensed Consolidated Financial Statements
the remaining useful life from the date of An impairment loss is recognised in the acquisition as certified by the technical valuer. Consolidated Statement of Profit and Loss if the carrying amount of an asset or its cash- When parts of an item of plant and equipment generating unit (CGU) exceeds its recoverable have different useful lives, they are treated as unit. Impairment loss recognised in respect of separate components and depreciated over a CGU is allocated first to reduce the carrying their respective estimated useful lives. amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of The residual values, useful lives and methods the other assets of the CGU on a pro-rata of depreciation are reviewed at each financial basis. A CGU is the smallest identifiable asset year end and adjusted prospectively. group that generates cash flows that are largely independent from other assets and Pro-rata depreciation is provided on all groups. Impairment losses are recognised property, plant and equipment and intangible in the Consolidated Statement of Profit and assets purchased or sold during the year. Loss, unless it reverses previous revaluation credited to equity, in which case it is charged ) h Non-current assets held for sale to equity. Non-current assets are classified as held for sale if it is highly probable that they will Goodwill arising from a business combination be recovered primarily through sale rather is allocated to CGUs or group of CGUs that than through continuing use. Such assets are expected to benefit from the synergies are generally measured at the lower of their of the combination. Goodwill is tested for carrying amount and fair value less costs to impairment on an annual basis and more sell. Losses on initial classification as held often, if there is an indication that goodwill for sale and subsequent gains and losses may be impaired, relying on a number of on re-measurement are recognised in the factors including operating results, business Consolidated Statement of Profit and Loss. plans and future cash flows. Impairment is determined for goodwill by assessing the Once classified as held-for-sale, intangible recoverable amount of each CGU (or group assets, property, plant and equipment and of CGUs) to which the goodwill relates. When investment properties are no longer amortised the recoverable amount of the CGU is less or depreciated, and any equity-accounted than its carrying amount, an impairment loss investee is no longer equity accounted. is recognised.
) i Inventory An asset’s recoverable amount is the higher Stores and operating supplies of an asset’s or CGU’s fair value less costs of Inventories which comprises food and disposal and its value in use. In assessing value beverages and operating supplies are valued in use, the estimated future cash flows are at lower of cost or net realisable value. Cost discounted to their present value using a pre- of inventories comprises purchase price, tax discount rate that reflects current market costs of conversion and other incidental assessments of the time value of money and costs incurred in bringing the inventories the risks specific to the asset. In determining to their present location and condition. In fair value less costs of disposal, recent market determining the cost, weighted average cost transactions are taken into account. For the method is used. purpose of impairment testing, assets that cannot be tested individually are grouped Net realisable value is the estimated selling together into the smallest group of assets price in the ordinary course of business less that generates cash inflows from continuing estimated costs to sell. use that are largely independent of the cash inflows of other assets or CGU. ) j Impairment of non-financial assets The Embassy Office Parks Group assesses, Impairment losses recognised in prior periods at each reporting date, whether there is an are assessed at each reporting date for any indication that a non-financial asset other indications that the loss has decreased or no than inventories and deferred tax assets longer exists. An impairment loss is reversed may be impaired. If any indication exists, or if there has been a change in the estimates when annual impairment testing for an asset used to determine the recoverable amount. is required, the Embassy Office Parks Group An impairment loss in respect of goodwill is estimates the asset’s recoverable amount. not subsequently reversed. In respect of other assets, such a reversal is made only to the
158 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
extent that the asset’s carrying amount does - Fair value through other not exceed the carrying amount that would comprehensive income (FVOCI) – have been determined, net of depreciation, if equity instrument; or no impairment loss had been recognised. - Fair value through profit or loss (FVTPL) ) k Foreign currency transactions Transactions in foreign currencies are Financial assets are not reclassified translated into the respective functional subsequent to their initial recognition, currencies of Embassy Office Parks Group’s except if and in the period the Embassy entities at the exchange rates at the dates of Office Parks Group changes its business the transactions. model for managing financial assets.
Monetary assets and liabilities denominated A financial asset is measured at amortised in foreign currencies are translated into the cost if it meets both of the following functional currency at the exchange rate at conditions and is not designated as the reporting date. Non-monetary assets FVTPL: and liabilities that are measured at fair value - the asset is held within a business in a foreign currency are translated into the model whose objective is to hold functional currency at the exchange rate when assets to collect contractual cash the fair value was determined. Non-monetary flows; and assets and liabilities that are measured based on historical cost in a foreign currency are - the contractual terms of the financial translated at the exchange rate at the date of asset give rise on specified dates to the transaction. cash flows that are solely payments of the principal and interest on the Exchange differences arising on foreign principal amount outstanding. exchange transactions settled and from translations during the year are recognised A debt investment is measured at FVOCI in the Consolidated Statement of Profit and if it meets both of the following conditions Loss of the year except exchange differences and is not designated as FVTPL: arising from the translation of the items which - the asset is held within a business are recognised in OCI. model whose objective is achieved by both collecting contractual cash ) l Financial instruments flows and selling financial assets; i) Recognition and initial measurement and Trade receivables and debt securities issued are initially recognised when - the contractual terms of the financial they are originated. All other financial asset give rise on specified dates to assets and financial liabilities are initially cash flows that are solely payments recognised when the Embassy Office of the principal and interest on the Parks Group becomes a party to the principal amount outstanding. contractual provisions of the instrument. On initial recognition of an equity A financial asset or financial liability is instrument that is not held for trading, initially measured at fair value plus, for the Embassy Office Parks Group may an item not at fair value through profit or irrevocably elect to present subsequent loss (FVTPL), transaction costs that are changes in the investment’s fair value directly attributable to its acquisition or in OCI (designated as FVOCI – equity issue. investment). This election is made on an investment by investment basis. ii) Classification and subsequent measurement All financial assets not classified as Financial assets measured at amortised cost or FVOCI On initial recognition, a financial asset is as described above are measured at classified as measured at FVTPL. This includes all derivative financial assets. On initial recognition, - Amortised cost; the Embassy Office Parks Group may - Fair value through other irrevocably designate a financial asset comprehensive income (FVOCI) – that otherwise meets the requirements debt instrument; to be measured at amortised cost or at
Half-Yearly Report 2020-21 159 Notes to the Condensed Consolidated Financial Statements
FVOCI or at FVTPL if doing so eliminates performance is evaluated on a fair or significantly reduces an accounting value basis are measured at FVTPL. mismatch that would otherwise arise. Financial assets: Assessment whether Financial assets: Business model contractual cash flows are solely assessment payments of principal and interest The Embassy Office Parks Group makes For the purpose of this assessment, an assessment of the objective of the ‘principal’ is defined as the fair value of business model in which a financial the financial asset on initial recognition. asset is held at a portfolio level because ‘Interest’ is defined as consideration this best reflects the way the business for the time value of money and for the is managed and information is provided credit risk associated with the principal to the Management. The information amount outstanding during a particular considered includes: period of time and for other basic lending risks and costs (e.g. liquidity risk and - the stated policies and objectives administrative costs), as well as a profit for the portfolio and the operation margin. of those policies in practice. These include whether management’s In assessing whether the contractual cash strategy focuses on earning flows are solely payments of principal contractual interest income, and interest, the Embassy Office Parks maintaining a particular interest Group considers the contractual terms rate profile, matching the duration of the instrument. This includes assessing of the financial assets to the duration whether the financial asset contains a of any related liabilities or expected contractual term that could change the cash outflows or realising cash flows timing or amount of contractual cash through the sale of the assets; flows such that it would not meet this - how the performance of the condition. In making this assessment, the portfolio is evaluated and reported Embassy Office Parks Group considers: to the Embassy Office Parks Group’s - contingent events that would change management; the amount or timing of cash flows; - the risks that affect the performance - terms that may adjust the contractual of the business model (and the coupon rate, including variable financial assets held within that interest rate features; business model) and how those risks are managed; - prepayment and extension features; and - how managers of the business are compensated – e.g. whether - terms that limit the Embassy Office compensation is based on the fair Parks Group’s claim to cash flows value of the assets managed or the from specified assets (e.g. non – contractual cash flows collected; recourse features) and A prepayment feature is consistent - the frequency, volume and timing with the solely payment of principal of sales of financial assets in prior and interest criterion if the prepayment periods, the reasons for such sales amount substantially represents unpaid and expectations about future sales amounts of principal and interest on the activity. principal amount outstanding, which may include reasonable additional T ransfers of financial assets to third compensation for early termination parties in transactions that do not of the contract. Additionally, for a qualify for derecognition are not financial asset acquired at a significant considered sales for this purpose, discount or premium to its contractual consistent with the Embassy Office par amount, a feature that permits or Parks Group’s continuing recognition requires prepayment at an amount of the assets. that substantially represents the contractual par amount plus accrued F inancial assets that are held for (but unpaid) contractual interest (which trading or are managed and whose may also include reasonable additional
160 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
compensation for early termination) is measured at amortised cost using the treated as consistent with this criterion if effective interest method. Interest the fair value of the prepayment feature expense and foreign exchange gains and is insignificant at initial recognition. losses are recognised in profit and loss. Any gain or loss on derecognition is also Financial assets: Subsequent recognised in profit and loss. measurement and gains and losses Financial These assets are subsequently iii) Derecognition assets at measured at fair value. Net Financial assets FVTPL gains and losses, including any The Embassy Office Parks Group interest or dividend income, derecognises a financial asset when the are recognised in profit and contractual rights to the cash flows from loss. the financial asset expire, or it transfers Financial These assets are subsequently the rights to receive the contractual assets at measured at amortised cost cash flows in a transaction in which amortised using the effective interest substantially all of the risks and rewards cost method. The amortised cost of ownership of the financial asset are is reduced by impairment transferred or in which the Embassy losses. Interest income, foreign Office Parks Group neither transfers nor exchange gains and losses and retains substantially all of the risks and impairment are recognised in rewards of ownership and does not retain profit or loss. Any gain or loss control of the financial asset. on derecognition is recognised in profit and loss. If the Embassy Office Parks Group enters Debt These assets are subsequently into transactions whereby it transfers instruments measured at fair value. Interest assets recognised in its Condensed at FVOCI income under the effective Consolidated Balance Sheet, but retains interest method, foreign either all or substantially all of the risks exchange gains and losses and and rewards of the transferred assets, the impairment are recognised in transferred assets are not derecognised. profit or loss. Other net gains and losses are recognised in Financial liabilities OCI. On derecognition, gains The Embassy Office Parks Group and losses accumulated in OCI derecognises a financial liability when its are reclassified to profit and contractual obligations are discharged or loss. cancelled, or expired. Equity These assets are subsequently instruments measured at fair value. The Embassy Office Parks Group also at FVOCI Dividends are recognised derecognises a financial liability when as income in profit or loss unless the dividend clearly its terms are modified and the cash represents a recovery of part flows under the modified terms are of the cost of the investment. substantially different. In this case, a new Other net gains and losses are financial liability based on the modified recognised in OCI and are not terms is recognised at fair value. The reclassified to profit and loss. difference between the carrying amount of the financial liability extinguished and the new financial liability with modified Financial liabilities: Classification, terms is recognised in profit and loss. subsequent measurement and gains and losses iv) Offsetting Financial liabilities are classified as Financial assets and financial liabilities measured at amortised cost or FVTPL. A are offset and the net amount presented financial liability is classified as at FVTPL in the Condensed Consolidated Balance if it is classified as held for trading, or it is Sheet only when the Embassy Office a derivative or it is designated as such on Parks Group has a legally enforceable initial recognition. Financial liabilities at right to set off the amounts and it intends FVTPL are measured at fair value and net either to settle them on a net basis or to gains and losses, including any interest realise the asset and settle the liability expense, are recognised in profit or loss. simultaneously. Other financial liabilities are subsequently
Half-Yearly Report 2020-21 161 Notes to the Condensed Consolidated Financial Statements
) m Compound financial instruments the Embassy Office Parks Group it would The liability component of a compound not consider otherwise; or financial instrument is initially recognised at - it is probable that the borrower will the fair value of a similar liability that does enter bankruptcy or other financial not have an equity conversion option. The reorganization; or equity component is initially recognised at the difference between the fair value of the - the disappearance of an active market for compound financial instrument as a whole a security because of financial difficulties and the fair value of the liability component. Any directly attributable transaction costs The Embassy Office Parks Group measures are allocated to the liability and equity loss allowances at an amount equal to components in proportion to their initial lifetime expected credit losses, except for the carrying amounts. following, which are measured as 12 month expected credit losses: Subsequent to initial recognition, the - debt securities that are determined to liability component of a compound financial have low credit risk at the reporting date; instrument is measured at amortised cost and using the effective interest method. The equity component of a compound financial - other debt securities and bank balances instrument is not measured subsequently. for which credit risk (i.e. the risk of default occurring over the expected life of the Interest related to the financial liability financial instrument) has not increased is recognised in profit and loss (unless it significantly since initial recognition. qualifies for inclusion in cost of asset). In case Loss allowances for trade receivables are of conversion at maturity, the financial liability always measured at an amount equal to is reclassified to equity and no gain or loss is lifetime expected credit losses. recognised. Lifetime expected credit losses are the ) n Impairment of financial assets expected credit losses that result from all Financial assets possible default events over the expected life The Embassy Office Parks Group recognises of a financial instrument. loss allowances for expected credit losses on: - financial assets measured at amortised 12-month expected credit losses are the cost; and portion of expected credit losses that result from default events that are possible within 12 - financial assets measured at FVTOCI- months after the reporting date (or a shorter debt investments period if the expected life of the instrument is less than 12 months). At each reporting date, the Embassy Office Parks Group assesses whether financial assets In all cases, the maximum period considered carried at amortised cost and debt securities when estimating expected credit losses is the at FVTOCI are credit-impaired. A financial maximum contractual period over which the asset is ‘credit-impaired’ when one or more Embassy Office Parks Group is exposed to events that have a detrimental impact on the credit risk. estimated future cash flows of the financial asset have occurred. When determining whether the credit risk of a financial asset has increased significantly Evidence that a financial asset is credit- since initial recognition and when estimating impaired includes the following observable expected credit losses, the Embassy Office data: Parks Group considers reasonable and - significant financial difficulty of the supportable information that is relevant and borrower or issuer; or available without undue cost or effort. This includes both quantitative and qualitative - a breach of contract such as a default or information and analysis, based on the being past due for 180 days or more; or Embassy Office Parks Group’s historical - the restructuring of a loan or advance experience and informed credit assessment by the Embassy Office Parks Group on and including forward-looking information. terms that in the material assessment of
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Notes to the Condensed Consolidated Financial Statements
The Embassy Office Parks Group assumes Embassy Office Parks Group does not have that the credit risk on a financial asset has any past history of significant impairment of increased significantly if it is more than 180 trade and other receivables. days past due. ) o Embedded derivatives The Embassy Office Parks Group considers a When the Embassy Office Parks Group financial asset to be default when: becomes a party to a hybrid contract with a host that is not an asset within the scope of - the borrower is unlikely to pay its credit Ind AS 109 Financial Instruments, it identifies obligations to the Embassy Office Parks whether there is an embedded derivative. Group in full, without recourse by the Embedded derivatives are separated from the Embassy Office Parks Group to actions host contract and accounted for separately if such as realising security (if any is held); the host contract is not a financial asset and or certain criteria are met. - the financial asset is 180 days or more past due without any security ) p Financial guarantee contracts Financial guarantee contracts are recognised Measurement of expected credit losses: as a financial liability at the time the guarantee Expected credit losses are a probability- is issued. The liability is initially measured at weighted estimate of credit losses. Credit fair value and subsequently at the higher of the losses are measured as the present value of all amount determined in accordance with Ind cash shortfalls (i.e. the difference between the AS 37 Provisions, Contingent Liabilities and cash flows due to the Embassy Office Parks Contingent Assets and the amount initially Group and the cash flows that the Embassy recognised less cumulative amortisation, Office Parks Group expects to receive). where appropriate.
Presentation of allowance for expected The fair value of financial guarantees is credit losses in the balance sheet: determined as the present value of the Loss allowances for financial assets measured difference in net cash flows between the at amortised cost are deducted from the contractual payments under the debt gross carrying amount of the assets. For instrument and the payments that would debt securities at FVTOCI, the loss allowance be required without the guarantee, or the is charged to profit and loss account and is estimated amount that would be payable to recognised in OCI. a third party for assuming the obligations.
Write-off: The gross carrying amount of a When guarantees in relation to debt or other financial asset is written off (either partially payables of subsidiaries or associates are or in full) to the extent that there is no realistic provided for with no compensation, the fair prospect of recovery. This is generally the values are accounted as contributions and case when the Embassy Office Parks Group recognised as part of the cost of investment. determines that the debtor does not have assets or sources of income that could ) q Leases generate sufficient cash flows to repay the Embassy Office Parks Group as a lessee amounts subject to write-off. However, financial assets that are written off could A contract is, or contains, a lease if the still be subject to enforcement activities in contract conveys the right to control the use order to comply with the Embassy Office of an identified asset for a period of time in Parks Group’s procedures for recovery of exchange for consideration. amounts due. The Embassy Office Parks Group recognises Majority of the financial assets of the Embassy right-of-use asset representing its right to Office Parks Group pertain to trade and use the underlying asset for the lease term at other receivables. Considering the nature of the lease commencement date. The cost of business, the Embassy Office Parks Group the right-of-use asset measured at inception does not foresee any credit risk on its trade shall comprise of the amount of the initial and other receivables which may cause measurement of the lease liability, adjusted an impairment. As per the agreement with for any lease payments made at or before the tenants, the receivables are covered by clause commencement date, less any lease incentives of payment security mechanism which ensures received, plus any initial direct costs incurred receipt of all trade receivables. Also, the and an estimate of the costs to be incurred
Half-Yearly Report 2020-21 163 Notes to the Condensed Consolidated Financial Statements
by the lessee in dismantling and removing the Embassy Office Parks Group as a lessor underlying asset or restoring the underlying i. Determining whether an arrangement asset or site on which it is located. contains a lease At inception of an arrangement, it is The right-of-use assets is subsequently determined whether the arrangement measured at cost less accumulated is or contains a lease. At inception or depreciation, accumulated impairment losses, on reassessment of the arrangement if any and adjusted for any remeasurement of that contains a lease, the payments and the lease liability. The right-of-use assets is other consideration required by such an depreciated using the straight-line method arrangement are separated into those from the commencement date over the for other elements on the basis of their shorter of lease term or useful life of right- relative fair values. of-use asset. Right-of-use assets are tested for impairment whenever there is any ii. Assets held under leases indication that their carrying amounts may Leases in which the Embassy Office Parks not be recoverable. Impairment loss, if any, Group does not transfer substantially all is recognised in the Statement of Profit the risks and rewards of ownership of an and Loss. asset are classified as operating leases. Rental income arising is accounted The lease liability is initially measured at the for on a straight-line basis over the present value of the lease payments that lease term. The lease term is the non- are not paid at the commencement date, cancellable period together with any discounted using the interest rate implicit further term for which the tenant has the in the lease or, if that rate cannot be readily option to continue the lease, where, at determined, the incremental borrowing rate the inception of the lease, the Embassy applicable to the entity within the Embassy Office Parks Group is reasonably certain Office Parks Group. Generally, the Embassy that the tenant will exercise that option. Office Parks Group uses its incremental Leases are classified as finance leases borrowing rate as the discount rate. For leases when substantially all of the risks and with reasonably similar characteristics, the rewards of ownership transfer from Embassy Office Parks Group, on a lease by the Embassy Office Parks Group to lease basis, may adopt either the incremental the lessee. Amounts due from lessees borrowing rate specific to the lease or the under finance leases are recorded as incremental borrowing rate for the portfolio receivables at the Embassy Office Parks as a whole. Group’s net investment in the leases.
The Embassy Office Parks Group recognises iii. Initial direct costs the amount of the re-measurement of lease Initial direct costs such as brokerage liability as an adjustment to the right-of-use expenses incurred specifically to earn asset. Where the carrying amount of the revenues from an operating lease are right-of-use asset is reduced to zero and there capitalised to the carrying amount of is a further reduction in the measurement of leased asset and recognised over the the lease liability, the Embassy Office Parks lease term on the same basis as rental Group recognises any remaining amount of income. the re-measurement in profit and loss. ) r Revenue recognition The Embassy Office Parks Group has elected Revenue is measured at the fair value of the not to recognise right-of-use assets and lease consideration received or receivable. This inter liabilities for short-term leases of all assets alia involves discounting of the consideration that have a lease term of 12 months or less due to the present value if payment extends and leases of low-value assets. The Embassy beyond normal credit terms. Office Parks Group recognizes the lease payments associated with these leases as Revenue is recognised when recovery of the an expense on a straight-line basis over the consideration is probable and the amount of lease term. revenue can be measured reliably.
i) Rental income from investment properties Rental income from property leased under operating lease is recognised
164 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
in the statement of profit and loss on ) v Recognitionof dividend and interest a straight-line basis over the term of income the lease. Lease incentives granted are Dividend income is recognised in profit and recognised as an integral part of the loss on the date on which the Embassy Office total rental income. The lease term is the Parks Group’s right to receive payment is non-cancellable period together with any established. further term for which the tenant has the option to continue the lease, where, at Interest income is recognised using the the inception of the lease, the Embassy effective interest method. The ‘effective Office Parks Group is reasonably certain interest rate’ is the rate that exactly discounts that the tenant will exercise that option. estimated future cash receipts through the Contingent rents are recognised as expected life of the financial instrument to the revenue in the period in which they are gross carrying amount of the financial asset. earned on a receipt basis. In calculating interest income, the effective ii) Income from finance lease interest rate is applied to the gross carrying The recognition of finance income is amount of the asset (when the asset is not based on a pattern reflecting a constant credit-impaired). However, for financial assets periodic rate of return on the lessor’s net that have become credit-impaired subsequent investment in the finance lease. to initial recognition, interest income is calculated by applying the effective interest iii) Revenue from Room Rentals rate to the amortised cost of the financial Revenue from room rentals are based asset. If the asset is no longer credit-impaired, on the occupancy charged on the basis then the calculation of interest income reverts of room rates which are contracted to the gross basis. (exclusive of applicable taxes). ) s Employee benefits iv) Revenue from contract with customers Defined contribution plan a) Revenue from maintenance services A defined contribution plan is a post- is recognised as and when the employment benefit plan under which services are rendered based on an entity pays fixed contributions into the terms of the contracts with the a separate entity and will have no legal lessees. or constructive obligation to pay further amounts. The Embassy Office Parks Group b) Revenue from Food, beverages makes specified monthly contributions and banquets towards government administered provident Revenue from food and beverages fund scheme. Obligations for contributions are recorded as and when food is to defined contribution plans are recognised served. Revenue generated from as an employee benefit expense in profit and the banquet services offered are loss in the periods during which the related charged on the basis of cover services are rendered by employees. Prepaid charges per person which is billed contributions are recognised as an asset to (exclusive of applicable taxes) based the extent that a cash refund or a reduction on guaranteed covers if actual cover in future payments is available. is less than contracted. Gratuity c) Other operating income A defined benefit plan is a post-employment Other operating income, including benefit plan other than a defined contribution service charges on rooms and Food plan. The Embassy Office Parks Group’s net & Beverage (F&B) revenues and obligation in respect of defined benefit plans other hospitality-related operating is calculated separately for each plan by income is recognised when the estimating the amount of future benefit that services are rendered and the same employees have earned in the current and become chargeable. Revenue from prior periods, discounting that amount and other services is recognised on deducting the fair value of any plan assets. accrual basis as per the terms of the agreement. The calculation of defined benefit obligation is performed annually by a qualified actuary
Half-Yearly Report 2020-21 165 Notes to the Condensed Consolidated Financial Statements
using the projected unit credit method. an asset which necessarily take a substantial When the calculation results in a potential period of time to get ready for their intended asset for the Embassy Office Parks Group, use are capitalised as part of the cost of that the recognised asset is limited to the present asset. Other borrowing costs are recognised value of economic benefits available in the as an expense in the period in which they are form of any future refunds from the plan incurred. or reductions in future contributions to the plan (‘the asset ceiling’). In order to calculate Interest expense is recognised using the the present value of economic benefits, effective interest method. The ‘effective consideration is given to any minimum interest rate’ is the rate that exactly discounts funding requirements. estimated future cash payments through the expected life of the financial instrument to Remeasurements of the net defined benefit the amortised cost of the financial liability. liability, which comprise actuarial gains and In calculating interest expense, the effective losses, the return on plan assets (excluding interest rate is applied to the amortised cost interest) and the effect of the asset ceiling of the liability. (if any, excluding interest), are recognised in OCI. The Embassy Office Parks Group ) u Taxation determines the net interest expense (income) Income tax comprises current and deferred on the net defined benefit liability (asset) for tax. Income tax expense is recognised in the period by applying the discount rate used the Consolidated Statement of Profit and to measure the defined benefit obligation at Loss except to the extent it relates to items the beginning of the annual period to the directly recognised in equity or in other then-net defined benefit liability (asset), comprehensive income. taking into account any changes in the net defined benefit liability (asset) during the (i) Current tax: period as a result of contributions and benefit Current tax comprises the expected tax payments. Net interest expense and other payable or receivable on the taxable expenses related to defined benefit plans are income or loss for the period/year and recognised in profit or loss. any adjustment to the tax payable or receivable in respect of previous years. When the benefits of a plan are changed or The amount of current tax reflects the when a plan is curtailed, the resulting change best estimate of the tax amount expected in benefit that relates to past service (‘past to be paid or received after considering service cost’ or ‘past service gain’) or the the uncertainty, if any, related to income gain or loss on curtailment is recognised taxes. It is measured using tax rates immediately in profit or loss. The Embassy (and tax laws) enacted or substantively Office Parks Group recognises gains and enacted by the reporting date. losses on the settlement of a defined benefit plan when the settlement occurs. Current tax assets and liabilities are offset only if there is a legally enforceable Compensated absences right to set off the recognised amounts, Short-term employee benefit obligations are and it is intended to realise the asset measured on an undiscounted basis and are and settle the liability on a net basis or expensed as the related service is provided. A simultaneously. liability is recognised for the amount expected to be paid, if the Embassy Office Parks Group Minimum Alternative Tax (‘MAT’) under has a present legal or constructive obligation the provisions of the Income Tax, 1961 to pay this amount as a result of past service is recognised as current tax in the provided by the employee, and the amount of Consolidated Statement of Profit and obligation can be estimated reliably. Loss. The credit available under the Act in respect of MAT paid is recognised as ) t Borrowing costs an asset only when and to the extent Borrowing costs are interest and other costs there is convincing evidence that the (including exchange differences relating to Embassy Office Parks Group will pay foreign currency borrowings to the extent normal income tax during the period for that they are regarded as an adjustment to which MAT credit can be carried forward interest costs) incurred in connection with the for set-off against normal tax liability. borrowing of funds. Borrowing costs directly MAT credit recognised as an asset is attributable to acquisition or construction of reviewed at each balance sheet date and
166 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
written down to the extent the aforesaid when the asset is realised or the liability is convincing evidence no longer exists. settled, based on the laws that have been enacted or substantively enacted at the (ii) Deferred tax: reporting date. Deferred tax is recognised in respect of temporary differences between the T he measurement of deferred tax reflects carrying amounts of assets and liabilities the tax consequences that would follow for financial reporting purposes and from the manner in which the Embassy the corresponding amounts used for Office Parks Group expects, at the taxation purposes. Deferred tax is also reporting date, to recover or settle recognised in respect of carried forward the carrying amount of its assets and tax losses and tax credits. Deferred tax is liabilities. not recognised for: D eferred tax assets and liabilities are - Temporary differences arising on offset if there is a legally enforceable the initial recognition of assets right to offset current tax assets and and liabilities in a transaction that liabilities, and they relate to income taxes is not a business combination and levied by the same tax authority on the that affects neither accounting nor same taxable entity, or on different tax taxable profit or loss at the time of entities, but they intend to settle current the transaction; tax liabilities and assets on a net basis - Temporary differences related or their tax assets and liabilities will be to investments in subsidiaries, realised simultaneously. associates, and joint arrangements to the extent that the Embassy T ax impact of timing difference which Office Parks Group is able to control arise during the tax holiday period are the timing of the reversal of the recognised only to the extent of those temporary differences and it is differences which are reversed after the probable that they will not reverse tax holiday period. in the foreseeable future; and ) v Provisions and contingencies - Taxable temporary differences The Embassy Office Parks Group recognises arising on initial recognition of a provision when there is a present obligation goodwill. (legal or constructive) as a result of a past obligating event that probably requires an D eferred income tax asset are recognised outflow of resources and a reliable estimate to the extent that it is probable that can be made of the amount of the obligation. future taxable profits will be available A disclosure for a contingent liability is made against which they can be used. The when there is a possible obligation or a present existence of unused tax losses is strong obligation that may, but probably will not, evidence that future taxable profit may require an outflow of resources. Where there not be available. Therefore, in case of is a possible obligation or a present obligation a history of recent losses, the Embassy that the likelihood of outflow of resources is Office Parks Group recognises a deferred remote, no provision or disclosure is made. tax asset only to the extent that it has sufficient taxable temporary differences Provisions for onerous contracts, i.e. contracts or there is convincing other evidence that where the expected unavoidable costs of sufficient taxable profit will be available meeting the obligations under the contract against which such deferred tax asset exceed the economic benefits expected to can be realised. be received under it, are recognised when it is probable that an outflow of resources D eferred tax assets – unrecognised embodying economic benefits will be or recognised, are reviewed at each required to settle a present obligation as reporting date and are recognised/ a result of an obligating event, based on a reduced to the extent that it is probable/ reliable estimate of such obligation. no longer probable respectively that the related tax benefit will be realised. If the effect of the time value of money is material, provisions are discounted. D eferred tax is measured at the tax rates that are expected to apply to the period
Half-Yearly Report 2020-21 167 Notes to the Condensed Consolidated Financial Statements
) w Operating segments ) x Errors and estimates An operating segment is a component of the The Embassy Office Parks Group revises its Embassy Office Parks Group that engages accounting policies if the change is required in business activities from which it may earn due to a change in Ind AS or if the change will revenues and incur expenses. All operating provide more relevant and reliable information segments’ operating results are reviewed to the users of the Condensed Consolidated regularly by a representative of the Embassy Financial Statements. Changes in accounting Office Parks Group, the Embassy Office Parks policies are applied retrospectively. Group’s Chief Operating Decision Maker (‘CODM’), to make decisions about resources A change in an accounting estimate that to be allocated to the segment and assess its results in changes in the carrying amounts of performance, and for which discrete financial recognised assets or liabilities or to profit or information is available. loss is applied prospectively in the period(s) of change. Discovery of errors results in revisions Net Operating Income (‘NOI’) is the key metric retrospectively by restating the comparative reported to the CODM for the purposes of amounts of assets, liabilities and equity of assessment of the segment results. The same the earliest prior period in which the error is defined as follows: is discovered. The opening balances of the earliest period presented are also restated. Commercial Offices segment: NOI for commercial offices is defined as ) y Cash and cash equivalents Revenue from operations (which includes Cash and cash equivalents in the Consolidated (i) facility rentals, (ii) maintenance services Balance Sheet comprises of cash at banks and income, (iii) income from finance lease, on hand, deposits held at call with bank or and (iv) other operating income for financial institutions, other short-term, highly Commercial Offices) less Direct operating liquid investments with original maturities expenses (which includes (i) Operating and of three months or less that are readily maintenance expenses including common convertible to known amounts of cash and area maintenance expenses (ii) property which are subject to an insignificant risk of taxes, (iii) rent, and (iv) insurance). changes in value.
Hospitality segment: ) z Distribution Policy: NOI for hospitality segment is defined as Under the provisions of the REIT Regulations, Revenue from operations (which includes (i) Embassy Office Parks REIT is required to room rentals, (ii) sale of food and beverages, distribute to the Unitholders not less than (iii) other operating income for hospitality less ninety percent of the net distributable cash Direct operating expenses (which includes flows (‘NDCF’) of Embassy Office Parks REIT (i) cost of materials consumed, (ii) employee and the current policy of the Manager is to benefits expenses, (iii) Operating and comply with such requirement. The NDCF maintenance expenses excluding property is calculated in accordance with the REIT management fees, and (iv) Other expenses). Regulations and in the manner provided in the NDCF framework defined by the Manager. Other segment: NOI for other segments is defined as Revenue In terms of the REIT Regulations and NDCF from operations (which includes income framework which prescribes for the minimum from generation of renewable energy) less amount of NDCF to be distributed to Embassy Direct operating expenses (which includes Office Parks REIT: (i) Operating and maintenance and (ii) Other - not less than 90% of the NDCF of the expenses). SPVs are required to be distributed to the Embassy Office Parks REIT, in proportion Certain income (such as interest, dividend to its shareholding in the SPV, subject to and other income) and certain expenses applicable provisions of the Companies (such as Other expenses excluding Act, 2013. Direct operating expenses, depreciation, amortization, impairment and finance cost) - 100% of the cash flows received by the are not specifically allocable to segments Holding Company from the underlying and accordingly these expenses are adjusted SPVs are required to be distributed to against the total income of the Embassy the Embassy Office Parks REIT, and not Office Parks Group. less than 90% of the NDCF generated by the Holding Company on its own shall be
168 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
distributed to the Embassy Office Parks For the purpose of the Consolidated Statement REIT, subject to applicable provisions of of Cash Flow, cash and cash equivalents the Companies Act, 2013. consist of cash and short-term deposits, as defined above, net of outstanding bank - The aforesaid net distributable cash flows overdrafts as they are considered an integral are made available to Embassy Office part of the Embassy Office Parks Group’s Parks REIT in the form of (i) Interest cash management. paid on Shareholder Debt provided by Embassy Office Parks REIT to the ) ac Earnings per unit SPV’s/Holding Company, (ii) Principal The basic earnings per unit is computed by repayment of Shareholder Debt, (iii) dividing the net profit/ (loss) attributable to Dividend declared by the SPVs/Holding the Unitholders of the Trust by the weighted Company and received by Embassy average number of units outstanding during Office Parks REIT and (iv) Proceeds from the reporting period. The number of units sale of any Embassy REIT assets. used in computing diluted earnings/ (loss) per unit comprises the weighted average Since Embassy Office Parks REIT endeavors units considered for deriving basic earnings/ to half yearly distributions, any shortfall as (loss) per unit and also the weighted average regards minimum half yearly distribution by number of units which could have been issued the SPVs and Holding Company to Embassy on the conversion of all dilutive potential Office Parks REIT, post interest paid on units. Shareholder Debt, Interim Dividend payments and Principal repayment of Shareholder Debt, Dilutive potential units are deemed converted would be done by declaring dividend, to the as of the beginning of the reporting date, extent permitted under the Companies Act, unless they have been issued at a later date. 2013. Repayment of short-term construction In computing diluted earnings per unit, only debt given to SPV’s are not considered for the potential equity units that are dilutive and purpose of distributions. which either reduces earnings per share or increase loss per units are included. aa) Cash distribution to Unitholders The Group recognises a liability to make ad) E arnings before finance costs, depreciation, cash distributions to Unitholders when amortisation, impairment loss and tax the distribution is authorised and a legal The Embassy Office Parks Group has elected obligation has been created. As per the REIT to present earnings before finance cost, Regulations, a distribution is authorised when depreciation, amortisation, impairment loss it is approved by the Board of Directors of and tax as a separate line item on the face of the Manager. A corresponding amount is the Consolidated Statement of Profit and Loss. recognised directly in equity. The Embassy Office Parks Group measures earnings before finance cost, depreciation, ab) Consolidated Statement of Cash flows amortisation, impairment loss and tax Consolidated Cash flows are reported using excluding share of profit of equity accounted the indirect method, whereby Profit/ (loss) investees on the basis of profit/ (loss) from before share of profit of equity accounted continuing operations. In its measurement, investees and tax is adjusted for the effects the Embassy Office Parks Group does not of transactions of a non-cash nature and any include depreciation and amortisation deferrals or accruals of past or future cash expense, impairment loss, finance costs, receipts or payments. The cash flows from share of profit of equity accounted investees operating, investing and financing activities and tax expense. of the Embassy Office Parks Group are segregated.
Half-Yearly Report 2020-21 169 - - Total 0.35 922.71 (0.87) 478.11 366.13 707.68 ` 334.74 1,073.81 1,073.81 1,408.55 21,772.74 21,772.74 21,773.09 21,295.50 20,698.93 20,364.54 - - - - 1.44 8.91 2.52 2.49 4.98 6.42 6.42 37.89 40.41 40.41 31.50 33.99 40.41 Vehicles ------0.02 11.62 10.83 (0.81) 10.83 10.83 10.83 10.83 10.83 10.83 supplies Operating Operating - - - 366.13 million). 0.16 0.01 6.38 0.63 11.51 6.92 6.45 17.89 11.60 10.96 17.89 18.05 10.97 10.97 (all amounts(all stated) otherwise unless in ` million Computers - - - - 7.13 1.20 6.16 0.97 0.25 11.08 11.33 17.26 11.33 18.46 12.30 Office 18.46 18.46 equipment - - - - 0.11 12.35 57.38 28.70 69.73 98.43 69.73 379.21 350.51 448.83 448.94 448.94 448.94 Electrical equipment 366.13 million (March 31, 2020: ` - - - ` and 0.72 5.38 39.25 79.09 84.47 (0.06) 84.47 123.72 401.51 fixtures 485.32 485.98 485.98 362.26 485.98 Furniture - - - 0.19 4.77 27.34 199.90 630.72 403.48 430.82 7,137.51 430.82 6,711.46 7,142.28 7,142.47 6,511.75 7,142.28 Plant and machinery - - - - 366.13million has been recognised against theproperty, plant andequipment the of hospitality ` 9.98 62.80 129.88 ` 366.13 million as at March 31, 2020 is after reducing the carrying amount of goodwill of 235.36 365.24 428.04 365.24 Buildings 7,067.88 7,067.88 7,057.90 7,067.88 6,702.64 6,639.84
------(refer (refer Land- 84.00 84.00 84.00 452.41 note ii) 84.00 freehold freehold 6,087.66 6,456.07 6,540.07 6,540.07 6,456.07 6,540.07
P T D A segment of Embassy Quadron. The impairment loss of million for the hotel property which is the lowest cash generating unit forming (CGU) part of hospitality segment and is allocated all to other property, plant and equipment of respective CGU in proportion their to carrying value. The impairment loss has been computed based on the assets’ recoverable amount as at reporting date which is it’s value in use as prescribed under Ind-AS 36. the Group. The Group has also aligned its method of depreciation straight-line to method across its SPV’s. process registration of and is scheduled for completion March by 31, 2021. PR
Impairment loss (refer note iii) note (refer Impairment loss Charge for the year for Charge Accumulated depreciation Accumulated At April 1, 2019 At September 30, 2020 30, September At At September 30, 2020 30, September At Deletion Carrying amount (net) amount Carrying As at March 31, 2020 Additions for the period for Additions At September 30, 2020 30, September At At April 1, 2020 Charge for the period for Charge At March 31, 2020 Deletion At April 1, 2020 Additions for the year for Additions At March 31, 2020 Notes theto Condensed Consolidated Financial Statements 3 Reconciliation of carrying amounts as at September 30, 2020 EQUIPMENT AND PLANT OPERTY, Particulars GROSS BLOCK OR (COST DEEMED COST) At April 1, 2019 Notes: i. ost acquisition the of SPV’s, the Embassyii. Office Parks Group has revisited the useful life the of property, plant and equipment and aligned the same across he solar plant has been constructediii. on 465.77 acres of land, the title for 254.47 acres is registered in name the of group and balance 211.30 acres is in uring theyear ended March 31, 2020, an impairmentloss of iv. ccumulated Depreciation as at September 30, 2020 includes impairment loss of
170 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report - - Total As at (2.19) (48.74) (39.59) 419.84 1,957.80 4,412.32 4,412.32 6,367.93 2,334.07 8,988.57 4,412.32 2,334.07 192,501.12 189,548.97 198,869.05 198,488.80 194,076.48 198,488.80 March 31, 2020 - - - - 1.68 1.03 2.71 9.16 1.68 8.57 0.77 1.68 11.61 2.69 8.90 10.84 (0.42) 10.84 2020 As at Computer 2,912.74 2,912.74 ------September 30, 30, September 0.13 5.31 1.83 5.31 3.61 5.31 1.70 3.48 5.23 3.48 0.08 3.48 Vehicle ` 183.28 The million). used rate to - - - - 1.78 2.10 1.03 (all amounts(all stated) otherwise unless in ` million (3.01) Office 22.82 19.85 22.82 43.42 44.33 22.82 24.60 44.45 20.60 43.42 equipment - - - 8.05 (0.14) (0.96) 142.73 487.10 348.61 487.10 487.10 629.69 1,783.57 2,277.76 Electrical 1,922.06 2,270.67 1,648.07 2,270.67 equipment - - and 116.60 million (March 31, 2020: (1.64) 111.50 (5.65) ` 56.30 180.31 (11.08) 360.10 fixtures 360.10 360.10 469.96 1,130.46 1,315.90 1,535.78 Furniture 1,490.56 1,065.82 1,490.56 - (0.41) 64.34 (4.30) 161.60 504.71 947.20 (39.66) 947.20 947.20 1,227.42 1,451.50 Plant and 8,182.76 9,574.22 8,627.02 8,224.86 9,574.22 9,634.26 machinery - - - - (23.25) 266.25 1,015.46 3,121.66 2,106.20 Buildings 5,858.46 2,106.20 2,106.20 81,683.17 81,926.17 81,683.17 75,824.71 79,576.97 78,804.51 - - - - - Land- (Refer notes) 312.10 180.46 483.74 483.74 483.74 664.20 leasehold 28,227.18 28,227.18 28,227.18 38,361.49 27,743.44 27,562.98 (10,446.41) ------23.10 Land- freehold 1,050.92 10,284.81 75,183.43 75,183.43 75,183.43 63,847.70 75,206.53 75,206.53
C I
Charge for the year for Charge Accumulated depreciation Accumulated At April 1, 2019 At September 30, 2020 30, September At At September 30, 2020 30, September At Disposals Carrying amount (net) amount Carrying As at March 31, 2020 Additions for the period for Additions At September 30, 2020 30, September At At April 1, 2020 Disposals At March 31, 2020 Charge for the period for Charge Adjustments (refer note i and vi) note (refer Adjustments Disposals At April 1, 2020 Additions for the year for Additions At March 31, 2020 determine the amount borrowing of costs eligible for capitalisation at a capitalisation which rate is the SPV specific “Weighted Borrowing Average Cost (WABC)”. 4 Particulars WORK-IN-PROGRESSAPITAL * Parcel) (Front Hotel MPPL-Hilton * forms part of MPPL CGU. Note: capitalised cost Borrowing The amount of borrowing cost capitalised during the half year ended September 30, 2020 is 5 Reconciliation of carrying amounts as at September 30, 2020 PROPERTY NVESTMENT Particulars GROSS BLOCK OR (COST DEEMED COST) At April 1, 2019 Notes theto Condensed Consolidated Financial Statements
Half-Yearly Report 2020-21 171 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
Notes: million has been capitalized as a part of land and the balance has been capitalized towards building. i MPPL: During the previous year ended 31 March Further, an amount of `10,446.41 million, being the 2020, cost of freehold land of `161.60 million has carrying cost of such land, has been reclassified been transferred to Karnataka Power Transmission from leasehold to freehold land. Corporation Limited (KPTCL) along with the 220 KVA substation constructed at Embassy Manyata. vii. QBPL: The leasehold land for Embassy Quadron is Since these are enabling assets to the overall Park, taken from MIDC for a lease term of 95 years. The the cost of land has been transferred to plant and lease expires in October 2100. As per the lease machinery and being depreciated over the useful agreement the Company can renew the lease for life of the substation. a further period of 95 years. ii. EOPPL: The leasehold land for Embassy Techzone viii. Post acquisition of the SPV’s, Group has revisited is taken from Maharashtra Industrial Development the useful life of the investment properties and Corporation (‘MIDC’) on a lease for a period of 95 aligned the same across the group. The Group years. The lease expires in July 2100. has also aligned its method of depreciation to straight-line method across its SPV’s. iii. OBPPL: The leasehold land for Embassy Oxygen is taken from New Okhla Industrial Development ix. Investment property comprises of commercial Authority (‘NOIDA’) on lease for a lease period of buildings and other assets forming part of the 90 years. The lease expires in September 2097. buildings, that is leased to third parties. The license agreement entered into with tenants may or may iv. ETPL: The leasehold land for First International not contain an initial non-cancellable period. Financial Centre is taken from Mumbai Mahanagar Subsequent renewals of these license agreements Regional Development Authority (‘MMRDA’) on a are negotiated with the tenants and historically lease for a period of 80 years. The lease expires in the average renewal period ranges between three June 2088. and five years. v. GSPL: The leasehold land for Embassy Galaxy is x. The investment property have been leased out to taken from NOIDA on a lease for a period of 90 lessees / held for lease on operating lease basis. years. The lease expires in June 2095. xi. The plant and machinery and furniture and fixtures vi. IENMPL: The leasehold land for Express Towers are physically attached to the buildings and form is taken from the Government of Maharashtra an integral part thereof, hence they are considered on a lease of 99 years (from 1963-64). The lease as investment property. expires in August 2063. However, pursuant to recent Maharashtra State notification in March xii. Additions to investment property and investment 2019, IENMPL made an application to the office of property under development include borrowing the Collector, Mumbai City, seeking conversion of cost amounting to `36.39 million (31 March 2020: the land on which the building known as “Express `440.22 million) at a capitalisation rate which is Towers” stands, from occupancy class II land that the SPV specific Weighted Average Borrowing is leasehold land into occupancy class I land, that Cost (WABC). is, freehold land, by a letter dated April 1, 2019. Pursuant to various orders passed by the office xiii. Investment property includes Right-of-Use (ROU) of the Collector, IENMPL has made an aggregate asset of `306.19 million (31 March 2020: `308.15 payment of `909.46 million towards regularization million) which is recorded under Land Leasehold. and conversion of the land. Subsequently, the The corresponding lease liability amounting to Collector, Mumbai pursuant to its order dated `313.35 million (31 March 2020: `322.93 million) is August 23, 2019, after regularising the usage of the recorded under other financial liabilities. said Property, approved the conversion of such land from occupancy class II and leasehold land into occupancy class I land that is freehold land, under the Maharashtra Land Revenue (Conversion of Occupancy Class II and Leasehold Lands into Occupancy Class I Lands) Rules, 2019. Out of the aforementioned `909.46 million, a sum of `756.41
172 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated) 6 GOODWILL As at September 30, 2020 and March 31, 2020 Consideration transferred Fair value of net Net carrying SPV Impairment loss for business assets value combination MPPL 48,790.52 37,774.36 - 11,016.16 EOPPL 62,768.25 50,854.97 - 11,913.28 EEPL 732.79 464.95 - 267.84 UPPL 2,841.67 2,151.80 487.14 202.73 ETPL 12,138.78 9,239.55 - 2,899.23 GSPL 4,662.50 2,700.39 - 1,962.11 IENMPL 13,210.97 7,139.40 - 6,071.57 OBPPL 12,308.89 5,779.40 - 6,529.49 QBPPL 5,595.08 3,998.26 - 1,596.82 QBPL 13,689.26 9,201.53 922.71 3,565.02 VCPPL 10,710.94 6,445.82 - 4,265.12 Total 187,449.65 135,750.43 1,409.85 50,289.37
As a result of the valuation conducted during the year ended March 31, 2020 by iVAS Partners, independent external property valuer appointed under Regulation 21 of REIT regulations, having appropriately recognised professional qualifications and recent experience in the location and category of the properties being valued in conjunction with value assessment services undertaken by CBRE South Asia Private Limited, an impairment of `1,409.85 million was recognized in the Statement of Profit and Loss against Goodwill and an impairment of `366.13 million was recognized in the Statement of Profit and Loss against property, plant and equipment, totalling to `1,775.98 million as impairment loss during the year ended March 31, 2020. Impairment charge mainly relates to the hospitality segment and more specifically UPPL (Hilton Hotel), and hospitality segment of QBPL (Four Seasons Hotel). The Hotel CGU is composed mainly of property, plant and equipment. The impairment charge arose in the Hotel CGU due to slower ramp up of occupancy coupled with the current economic conditions due to Covid-19 pandemic. The annual impairment test performed considers the current economic conditions and revised business plans to determine the higher of the “value in use” and the “fair value less cost to sell” in accordance with Ind AS 36.
7 INTANGIBLE ASSETS Reconciliation of carrying amounts as at September 30, 2020 Particulars Power Purchase Right to use Computer Total Agreement trade mark software Gross Block At April 1, 2019 3,348.00 1,647.91 22.87 5,018.78 Addition during the year - 133.97 9.85 143.82 At March 31, 2020 3,348.00 1,781.88 32.72 5,162.60 At April 1, 2020 3,348.00 1,781.88 32.72 5,162.60 Addition during the period - - 1.01 1.01 At September 30, 2020 3,348.00 1,781.88 33.73 5,163.61 Accumulated amortisation At April 1, 2019 - - - - Amortisation for the year 145.56 - 15.68 161.24 At March 31, 2020 145.56 - 15.68 161.24 At April 1, 2020 145.56 - 15.68 161.24 Amortisation for the period 72.87 - 6.37 79.24 At September 30, 2020 218.43 - 22.05 240.48 Carrying amount (net) As at March 31, 2020 3,202.44 1,781.88 17.04 5,001.36 At September 30, 2020 3,129.57 1,781.88 11.68 4,923.13
Half-Yearly Report 2020-21 173 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated) 8 INVESTMENT PROPERTY UNDER DEVELOPMENT (IPUD) IPUD mainly comprises upcoming buildings and other infrastructure upgrades in various properties. The details are as follows: As at As at SPV/ Hold Co Particulars September 30, 2020 March 31, 2020 Base build OBPL Tower 1 191.20 164.66 EOPPL Hudson block 226.98 183.19 EOPPL Ganges block 199.48 118.13 Infrastructure and Upgrade Projects MPPL Flyover 1,024.57 629.48 MPPL Master plan upgrade 465.61 393.68 EOPPL Master plan upgrade 257.22 228.13 QBPL Master plan upgrade 105.09 37.50 Multiple Various 33.89 18.62 2,504.04 1,773.39
9 EQUITY ACCOUNTED INVESTEE As at As at Particulars September 30, 2020 March 31, 2020 Investment in joint venture Golflinks Software Park Private Limited 24,287.47 24,091.36 - 10,000 (March 31, 2019 - 10,000) equity share of ` 10 each, fully paid up 24,287.47 24,091.36 Goodwill on acquisition included as a part of carrying cost 10,449.36 10,449.36
Percentage ownership interest 50% 50% Fair value of net assets on Purchase Price Allocation 26,247.74 26,247.74 Embassy Office Parks Group's share of net assets (50%) 13,123.87 13,123.87 Carrying amount of interest (including goodwill) 24,287.47 24,091.36
174 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated) 10 CURRENT INVESTMENTS As at As at Particulars September 30, 2020 March 31, 2020 Trade, unquoted, at amortised cost Investment in debentures of joint venture (refer note 49) and (i) below - 724.38 Nil (March 31, 2020: 2,500 ) 8.5% debentures Non-trade investments measured at fair value through profit and loss Unquoted, Investment in mutual funds HDFC Liquid Fund - Growth Option - 1,950.71 IDFC Cash Fund - Growth Option - 390.14 ICICI Prudential Liquid Fund - Growth Option - 1,350.76 Axis Liquid Fund - Growth Option - 1,914.03 SBI Liquid Fund - Growth Option - 1,629.14 Tata Liquid Fund - Growth Option - 1,233.24 HDFC Overnight Fund - Growth Option - 255.01 IDFC Overnight Fund - Growth Option - 1,810.13 Axis Liquid Fund Overnight Fund - Growth Option - 165.94 ICICI Prudential Overnight Fund - Growth Option - 850.11 - 12,273.59 Nil (March 31, 2020: 2,500) unlisted, unrated, secured redeemable, non-convertible debentures of Golflinks Software Parks Private Limited with face value of `1,000,000 each. Outstanding as on September 30, 2020 is ` Nil (March 31, 2020: `724.38 million).
Terms: - Interest Rate : 8.50% p.a. on monthly outstanding balance. - Security : The debentures are secured by first ranking exclusive security interest over Torrey Pines building. - Redemption : Debentures shall be redeemed in 16 monthly instalments (principal and interest) of `160.00 million each and 17th instalment of `98.99 million in accordance with redemption schedule. Early redemption of the debentures shall be permitted from internal accruals of the issuer or any other sources, at the option of the issuer and without any prepayment penalty. - During the quarter ended September 30, 2020, the Investment in debentures has been fully redeemed. Investment measured at amortised cost - 724.38 Investment measured at fair value through profit and loss - 11,549.21
NON-CURRENT FINANCIAL ASSETS 11 NON-CURRENT LOANS As at As at Particulars September 30, 2020 March 31, 2020 Unsecured, considered good Security deposits - related party (refer note 49) 11.73 11.73 - others 657.02 656.98 668.75 668.71
12 OTHER FINANCIAL ASSETS As at As at Particulars September 30, 2020 March 31, 2020 Unsecured, considered good Fixed deposits with banks* 531.94 673.02 Unbilled revenue (refer note 49) 872.35 506.91 Receivable under finance lease 2.87 8.61 1,407.16 1,188.54 * Includes fixed deposits held as lien against debt taken and margin money 531.94 670.06 for bank guarantee
Half-Yearly Report 2020-21 175 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated) 13 NON-CURRENT TAX ASSETS (NET) As at As at Particulars September 30, 2020 March 31, 2020 Advance tax, net of provision for tax 1,252.13 1,554.70 1,252.13 1,554.70
14 OTHER NON-CURRENT ASSETS As at As at Particulars September 30, 2020 March 31, 2020 Unsecured, considered good Advance paid for co-development of property, including development rights on land 14,203.60 13,998.26 (refer note 52) * Other capital advances - related party (refer note 49) 251.69 222.56 - others 1,440.99 1,333.74 Balances with government authorities 178.05 164.03 Paid under protest to government authorities (refer note 46) 676.26 676.26 Prepayments (refer note 49) 63.74 80.79 16,814.33 16,475.64
* Advance paid for co-development of property, includes borrowing cost capitalised during the period amounting to ` Nil (for the year ended March 31, 2020: `344.42 million) at a capitalisation rate which is the SPV specific Weighted Average Borrowing Cost (WABC). 15 INVENTORIES (VALUED AT LOWER OF COST AND NET REALISABLE VALUE) As at As at Particulars September 30, 2020 March 31, 2020 Stock of consumables 11.17 12.82 11.17 12.82
16 TRADE RECEIVABLES As at As at Particulars September 30, 2020 March 31, 2020 Unsecured Considered good * 237.12 242.25 Credit impaired 16.02 16.02 Less: Allowances for impairment losses (16.02) (16.02) 237.12 242.25
*Includes trade receivables from related parties amounting to `34.54 million (March 31, 2020: `57.03 million) (refer note 49)
17 CURRENT LOANS As at As at Particulars September 30, 2020 March 31, 2020 Unsecured, considered good Security deposits - related party (refer note 49) 50.00 50.00 - others 1.30 1.49 51.30 51.49
176 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated) 18A CASH AND CASH EQUIVALENTS As at As at Particulars September 30, 2020 March 31, 2020 Cash on hand 0.69 1.12 Balances with banks - in current accounts* 13,172.64 3,225.16 - in escrow accounts - Balances with banks for unclaimed distributions 0.81 0.26 - Others 0.01 2.62 - in deposit accounts with original maturity of less than three months - 20.00 13,174.15 3,249.16
* Balance in current accounts includes cheques on hand as at September 30, 2020 amounting to `952.16 million (March 31, 2020: `2,121.94 million).
18B OTHER BANK BALANCES As at As at Particulars September 30, 2020 March 31, 2020 Balances with banks - in fixed deposit accounts with original maturity greater than three months and 108.79 169.79 maturity less than twelve months from the reporting date* 108.79 169.79 * Deposit for availing letter of credit facilities 108.79 169.79
19 OTHER FINANCIAL ASSETS As at As at Particulars September 30, March 31, 2020 2020 Unsecured, considered good Interest accrued but not due - on fixed deposits 1.24 7.53 - on statutory deposits 48.94 40.39 - on others 2.51 4.35 Unbilled revenue (refer note 49) 318.56 256.91 Unbilled maintenance charges 66.25 59.45 Receivable under finance lease 11.48 16.88 Other receivables - related parties (refer note 49) 2.62 7.94 - others 15.92 6.01 467.52 399.46
20 OTHER CURRENT ASSETS As at As at Particulars September 30, March 31, 2020 2020 Unsecured, considered good Advance for supply of goods and rendering of services - to related parties (refer note 49) 2.79 2.78 - to others 28.46 51.32 Balances with government authorities 109.71 149.93 Prepayments (refer note 49) 175.18 134.21 Other advances 13.79 12.98 329.93 351.22
Half-Yearly Report 2020-21 177 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated) 21 UNIT CAPITAL Unit Capital No in Million Amount As at April 1, 2019 771.67 229,039.26 Add: Reversal of issue expenses no longer payable (refer note below) - 81.70 Closing balance as at March 31, 2020 771.67 229,120.96 As at April 1, 2020 771.67 229,120.96 Closing balance as at September 30, 2020 771.67 229,120.96
Note: Issue expenses pertaining to the Initial Public Offering (IPO) and listing of the Units on the National Stock Exchange and Bombay Stock Exchange have been reduced from the Unitholders capital in accordance with Ind AS 32 Financial Instruments: Presentation. During the year ended March 31, 2020, provision for issue expenses no longer payable, has been reversed amounting to `81.70 million.
(a) Terms/ rights attached to Units The Trust has only one class of Units. Each Unit represents an undivided beneficial interest in the Trust. Each holder of Units is entitled to one vote per unit. The Unitholders have the right to receive at least 90% of the Net Distributable Cash Flows of the Trust at least once in every six months in each financial year in accordance with the REIT Regulations. The Board of Directors of the Manager approves dividend distributions. The distribution will be in proportion to the number of Units held by the Unitholders. The Trust declares and pays dividends in Indian Rupees.
Under the provisions of the REIT Regulations, Embassy Office Parks REIT is required to distribute to Unitholders not less than 90% of the net distributable cash flows of Embassy Office Parks REIT for each financial year. Accordingly, a portion of the Unitholders’ funds contains a contractual obligation of the Trust to pay to its Unitholders cash distributions. The Unitholders’ funds could have been classified as compound financial instrument which contain both equity and liability components in accordance with Ind AS 32 - Financial Instruments: Presentation. However, in accordance with SEBI Circulars (No. CIR/IMD/DF/146/2016 dated December 29, 2016 and No. CIR/IMD/DF/141/2016 dated December 26, 2016) issued under the REIT Regulations, the Unitholders’ funds have been classified as equity in order to comply with the mandatory requirements of Section H of Annexure A to the SEBI Circular dated December 26, 2016 dealing with the minimum disclosures for key financial statements. Consistent with Unitholders’ funds being classified as equity, the distributions to Unitholders is presented in Statement of Changes in Unitholders’ Equity and not as finance cost. In line with the above, the dividend payable to Unitholders is recognised as liability when the same is approved by the Manager.
(b) Unitholders holding more than 5 percent Units in the Trust
As at September 30, 2020 As at March 31, 2020 Name of the Unitholder No of Units % holding No of Units % holding Embassy Property Developments Private Limited 115,484,802 14.97% 115,484,802 14.97% SG Indian Holding (NQ) Co I Pte Limited 88,333,166 11.45% 104,094,966 13.49% BRE Mauritius Investments 84,621,955 10.97% 93,610,755 12.13% Veeranna Reddy 49,847,582 6.46% 65,472,582 8.48% BRE/ Mauritius Investments II 39,700,450 5.14% 45,630,850 5.91% India Alternate Property Limited 31,193,186 4.04% 39,446,986 5.11%
(c) The Trust has not allotted any fully paid-up units by way of bonus shares nor has it bought back any class of units from the date of incorporation till the balance sheet date. Further, the Trust has issued an aggregate of 613,332,143 Units of `300 each for consideration other than cash from the date of incorporation till the balance sheet date.
178 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated) 22 OTHER EQUITY* As at As at Particulars September 30, 2020 March 31, 2020 Reserves and Surplus Retained earnings (11,390.66) (5,943.12) (11,390.66) (5,943.12)
*Refer Consolidated Statement of Changes in Unitholders’ Equity for detailed movement in other equity balances.
Retained earnings The cumulative gain or loss arising from the operations which is retained by the Embassy Office Parks REIT is recognized and accumulated under the heading of retained earnings. At the end of the period, the profit/(loss) after tax is transferred from the Statement of Profit and Loss to the retained earnings account.
23 BORROWINGS As at As at Particulars September 30, 2020 March 31, 2020 Secured Non-convertible debentures - Embassy REIT Series I NCD 2019 - Tranche I (refer note i) 33,895.07 32,351.16 - Embassy REIT Series I NCD 2019 - Tranche II (refer note i) 6,974.68 6,667.66 - Embassy REIT Series II NCD 2020 - Tranche A (refer note ii) 7,357.74 - Terms loans - from banks (refer note iv) 5,135.94 10,978.43 - vehicle loans 9.81 30.60 Deferred payment liability (refer note iii) 6,026.11 6,142.66 59,399.35 56,170.51
Notes: commercial complex known as “Mfar Manyata (i) In May 2019, the Trust issued 30,000 listed, AAA Tech Park”. The above charge excludes L1 - rated, secured, redeemable and non-convertible Office block, consisting of 4,77,949 sq.ft of Embassy REIT Series I NCD 2019 (Tranche I), super built up area along with the undivided debentures having face value of `1 million each share of the lands and future development / amounting to `30,000.00 million with an Internal construction on Blocks designated as F1 and Rate of Return (IRR) of 9.4% and will mature on L4 that MPPL may undertake in the Project June 2, 2022. In November 2019, the Trust further “Embassy Manyata Business Park” along with issued 6,500 such debentures (Tranche II ) with the remaining undivided share of such land. an Internal Rate of Return (IRR) of 9.05% and with same terms and conditions as Tranche I. 2. A sole and exclusive first ranking pledge created by the Embassy REIT and EOPPL over The Tranche I and Tranche II NCD described above their total shareholding in the SPV’s namely were listed on the Bombay Stock Exchange on QBPPL, ETPL, VCPPL, GSPL and MPPL May 15, 2019 and November 28, 2019 respectively. together known as “secured SPVs”.
Security terms 3. A sole and exclusive first ranking charge The NCD’s are secured against each of the following by way of hypothecation created by the in favor of the Security Trustee (holding for the Embassy REIT over identified bank accounts benefit of the Debenture Trustee and ranking pari and receivables of the Trust. passu inter se the Debenture Holders): 4. A sole and exclusive first ranking charge 1. A sole and exclusive first ranking charge by way of hypothecation created by each created by MPPL on (a) land measuring 112.475 secured SPV over identified bank accounts acres at Bengaluru together with blocks and receivables of each secured SPV. and various commercial buildings; (b) 1.022 acres (Phase 1) and 1.631 (Phase IV) acres 5. A negative pledge on all assets of each of undivided right, title and interest in the secured SPV except MPPL.
Half-Yearly Report 2020-21 179 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
Redemption terms: which the aforesaid buildings are constructed 1. These debentures are redeemable by way of out of the aggregate area of land measuring bullet payment on 2 June 2022. 67.45 acres equivalent to 2,72,979 sq. mtrs.
2. Tranche I debentures have a redemption 2. A sole and exclusive first ranking pledge premium of 9.4% IRR compounded annually created by the Embasy REIT over the and Tranche II debentures have a redemption shareholding in the SPV’s namely IENMPL and premium of 9.05% IRR compounded annually. EOPPL together known as “secured SPVs” along with shareholder loans given to these 3. In case of downgrading of credit rating , the SPVs IRR shall increase by 0.25% - 1.25% over and above the applicable IRR calculated from 3. A sole and exclusive first ranking charge by the date of change of rating. In case of any way of hypothecation created by Embassy subsequent upgrading of credit rating, the REIT over identified bank accounts and IRR shall restore/decrease by 0.25% - 1.00% receivables. over and above the applicable IRR calculated from the date of change of rating. 4. A sole and exclusive first ranking charge by way of hypothecation created by EOPPL over 4. The issuer shall have the option of redeeming identified bank accounts and receivables. all or part of the debentures on a pro-rata basis at any time on a specified call option date 5. A Corporate Guarantee issued by each of (between May 2021 to May 2022) by delivering EOPPL and IENMPL a Call Option Notice to the debenture holders prior to the relevant call option date, subject Redemption terms: to certain agreed minimum aggregate 1. Interest is payable on the last day of each nominal value of debentures being redeemed. financial quarter in a year until the Scheduled Redemption Date (ii) In September 2020, the Trust issued 7,500 listed, AAA rated, secured, redeemable and 2. Tranche A debentures will be redeemed on non ‑convertible Embassy REIT Series II NCD 2020 the expiry of 37 months from the Date of (Tranche A), debentures having face value of `1 Allotment for the Tranche A Debentures at million each amounting to `7,500.00 million with par on October 9, 2023. an coupon rate of 7.25% p.a. payable quarterly. 3. In case of downgrading of credit rating , the The NCD described above were listed on the coupon rate shall increase by 0.25% - 1.25% Bombay Stock Exchange on September 17, 2020. over and above the applicable coupon rate calculated from the date of change of rating. Security terms In case of any subsequent upgrading of The NCD’s are secured against each of the following credit rating, the IRR shall restore/decrease in favor of the Security Trustee (holding for the by 0.25% - 1.00% over and above the coupon benefit of the Debenture Trustee and ranking pari rate calculated from the date of change of passu inter se the Debenture Holders): rating.
1. A sole and exclusive first ranking charge by 4. The issuer shall have the option of redeeming way of mortgage created by EOPPL on the all or part of the debentures on a pro-rata constructed buildings and related parcels basis at any time on a specified call option identified as Block 2, Block 3, Block 6, Block date (between March 2023 to Sep 2023) I, Block 11 and Block 5, having an aggregate by delivering a Call Option Notice to the leasable area of 2,00,674 square meters and debenture holders prior to the relevant forming part of the development known as call option date, subject to certain agreed Embassy Tech Zone together with portion of minimum aggregate nominal value of land admeasuring 96,630 square meters on debentures being redeemed.
180 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
Disclosure required under SEBI circular SEBI/HO/DDHS/DDHS/CIR/P/2018/71 dated April 13, 2018 5. Details of non-convertible debentures are as follows:-
Secured/ Previous due date Next due date Particulars Unsecured Principal Interest Principal Interest Embassy REIT Series I NCD Secured - - June 2, 2022 June 2, 2022 2019 (Tranche I and II) Embassy REIT Series II NCD Secured - September 30, October 9, December 31, 2020 (Tranche A) 2020 2023 2020
6. Rating agency CRISIL has assigned a rating of “CRISIL AAA/Stable” to Embassy REIT Series I NCD 2019 and Embassy REIT Series II NCD 2020
7. Other requirements as per Guidelines for issuance of debt securities by Real Estate Investment Trusts (REITs)
As at As at Particulars September 30, 2020 March 31, 2020 Asset cover ratio (refer a below) 18.03% 17.32% Debt -equity ratio (refer b below) 0.28 0.26 Debt-service coverage ratio (refer c below) 3.38 4.55 Interest-service coverage ratio (refer d below) 3.50 5.10 Net worth (refer e below) 217,730.30 223,177.84
Formulae for computation of ratios are as (iii) Deferred payment liability follows basis Condensed Consolidated Financial EEPL SPV has entered into a deferred payment Statements:- agreement with IL&FS Solar Power Limited for `6,853.90 million (as at September 30, 2020: a) Asset cover ratio* = Total borrowing/ Gross `7,416.13 millon, March 31, 2020: `7,278.74 million), asset value as computed by independent for the purpose of financing the construction and valuers development of a solar photovoltaic electricity generation facility with a minimum capacity of b) Debt equity ratio* = Total borrowings/ 100 MW AC. The debt carries interest at an IRR of Unitholders’ Equity 12.72% with a fixed EMI.
c) Debt Service Coverage Ratio = Earnings before Security terms Finance costs, Depreciation, Amortisation, 1. Exclusive first charge by way of deposit of Impairment Loss and Tax / [Finance cost title deeds on the project land in accordance (net of capitalisation and excluding interest with the mortgage documentation. on lease deposit and lease liability) + Principal repayments made during the year] 2. Charge over the entire moveable properties (both present and future) of the Embassy d) Interest Service Coverage Ratio = Earnings Energy SPV, in relation to the project before Finance costs, Depreciation, (including without limitation all tangible and Amortisation, Impairment Loss and Tax intangible assets). / Finance cost (net of capitalisation and excluding interest on lease deposit and lease 3. The above deferred payment liability is also liability) secured by a guarantee given by EOPPL, Holding Co., to Embassy Office Parks REIT. e) Net worth = Unit capital + Other equity Redemption terms: * Total borrowings = Long-term borrowings + Short-term The liability is repayable in 180 months equal borrowings + current maturities of long-term borrowings instalments starting from April 2018 and to be settled by February 2033. Pursuant to mutual agreement with IL&FS Solar Power Limited, only
Half-Yearly Report 2020-21 181 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
50% of EMI are payable to them till the registration under a resolution process, pending which, the of agreed 465.77 acres of land is completed in deferred payment liability has been classified as favor of Embassy Energy SPV. As at end of non-current liability. September 30, 2020, the land registered is 254.47 acres. EEPL has accordingly paid 50% of principal (iv) (a) HSBC Limited [balance as at September and interest and the balance is withheld. 30, 2020: Nil (March 31, 2020: `3,361.58 million)] In accordance with the deferred payment First ranking mortgage of undivided share agreement, the Group issued a prepayment of land and building thereon (L1) situated at offer to IL&FS Solar Power Limited (‘lender’) in Embassy Manyata, Bengaluru. December 2019 in respect of outstanding debt as at that date. While the offer has been in-principle First charge over the entire lease rental accepted by the lender, the lender is awaiting receivables from tenant pertaining to building final approval by National Company Law Tribunal, (L1) situated at Embassy Manyata, Bengaluru. Mumbai as the lender and its group entities are
Reserve account to be maintained equal to three months repayment obligations with the lender.
As at As at Repayment and interest terms September 30, 2020 March 31, 2020 Repayable in 36 monthly instalments. The debt carries interest of MCLR + - 3,361.58 0.35%
The loan has been prepaid during the current quarter
(b) State Bank of India [balance as at September 30, 2020: `5,170.66 (March 31, 2020: `4,381.10 million)] First ranking exclusive mortgage of undivided share of land admeasuring 8.26 acres (Front Parcel) situated at Embassy Manyata, Bengaluru.
First charge over entire cash flows, receivable, book debts, and revenues from the projects to be constructed at the land admeasuring 8.26 acres (Front Parcel) situated at Embassy Manyata, Bengaluru.
First charge on the Trust and Retention Account and other accounts established and maintained pursuant to Trust and Retention Account Agreement.
As at As at Repayment and interest terms September 30, 2020 March 31, 2020 Repayable by way of single bullet repayment in 18 months from date of 5,170.66 4,381.10 commercial operations but not later than September 30, 2023. The debt carries interest of MCLR + 1.25%
(c) HSBC Limited [balance as at September 30, 2020: Nil (March 31, 2020: `3,389.99 million)] First charge over the entire cash flows of Tower 2 and Tower 3 of Embassy Oxygen, Noida, Uttar Pradesh till full liquidation of the borrowings / credit facilities along with interest and charges.
Equitable mortgage over underlying Tower 2 & Tower 3 building of Embassy Oxygen situated at Plot No. 7, Sector 144, Noida Uttar Pradesh India.
As at As at Repayment and interest terms September 30, 2020 March 31, 2020 Repayable in 120 monthly instalments, bullet repayment for remainder at the - 3,389.99 end of 10th year. The debt carries interest of MCLR + 0.15%
The loan has been prepaid during the current quarter
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Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated) 24 OTHER FINANCIAL LIABILITIES As at As at Particulars September 30, 2020 March 31, 2020 Lease deposits (refer note 49) 2,404.35 2,360.50 Lease liability 293.00 302.58 Payable for purchase of fixed assets 147.99 455.57 2,845.34 3,118.65
25 PROVISIONS As at As at Particulars September 30, 2020 March 31, 2020 Provision for employee benefits - gratuity 6.23 5.25 6.23 5.25
26 DEFERRED TAX LIABILITIES (NET) As at As at Particulars September 30, 2020 March 31, 2020 Minimum Alternate Tax credit entitlement (4,282.29) (4,015.29) Deferred tax liabilities (net) 44,124.45 44,422.67 39,842.16 40,407.38
27 OTHER NON-CURRENT LIABILITIES As at As at Particulars September 30, 2020 March 31, 2020 Deferred lease rental 419.26 378.21 Advances from customers 6.26 8.49 425.52 386.70
28 TRADE PAYABLES As at As at Particulars September 30, 2020 March 31, 2020 Trade payable - total outstanding dues to micro and small enterprises 4.15 2.48 - total outstanding dues of creditors other than micro and small enterprises - to related parties (refer note 49) 99.76 115.94 - to others 84.71 136.33 188.62 254.75
Half-Yearly Report 2020-21 183 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated) 29 OTHER FINANCIAL LIABILITIES As at As at Particulars September 30, 2020 March 31, 2020 Current maturities of long-term debt - from banks 48.73 154.25 - deferred payment liability 1,390.02 1,136.08 Security deposits - related party (refer note 49) 185.00 185.00 Lease deposits (refer note 49) 7,280.35 7,137.07 Book overdraft - 137.41 Capital creditors for purchase of fixed assets - to related party (refer note 49) 20.32 14.73 - to others 1,194.33 975.66 - Lease liability 20.35 20.35 Unclaimed dividend 0.81 0.26 Other liabilities - to related party (refer note 49) 150.27 172.62 - to others 622.30 629.36 10,912.48 10,562.79
30 PROVISIONS As at As at Particulars September 30, 2020 March 31, 2020 Provision for employee benefits - gratuity - 0.03 - compensated absences - 2.34 - 2.37
31 OTHER CURRENT LIABILITIES As at As at Particulars September 30, 2020 March 31, 2020 Unearned income 31.61 44.09 Advances received from customers (refer note 49) 357.49 291.43 Statutory dues 218.91 193.92 Deferred lease rentals 256.97 252.14 864.98 781.58
*Includes advances received from related parties amounting to `Nil (March 31, 2020: `1.92) (Refer Note 49)
32 CURRENT TAX LIABILITIES (NET) As at As at Particulars September 30, 2020 March 31, 2020 Provision for income-tax, net of advance tax 89.78 34.51 89.78 34.51
184 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated) 33 REVENUE FROM OPERATIONS
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended September March September March September June September 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2020 30, 2019 Facility rentals 4,487.94 4,217.87 4,115.86 8,705.81 8,286.55 8,403.44 16,689.99 Income from finance lease - 0.07 0.67 0.07 0.76 1.52 2.28 Room rentals 14.88 12.47 162.31 27.35 347.97 299.43 647.40 Revenue from contracts with customers Maintenance services 337.74 338.58 441.94 676.32 887.53 889.90 1,777.43 Sale of food and 13.65 4.22 96.01 17.87 231.54 160.35 391.89 beverages Income from generation 355.14 404.94 332.81 760.08 845.07 721.18 1,566.25 of renewable energy Other operating income - hospitality 1.34 1.26 47.50 2.60 34.48 68.92 103.40 - others 190.81 182.85 8.95 373.66 258.24 12.34 270.58 5,401.50 5,162.26 5,206.04 10,563.76 10,892.14 10,557.08 21,449.22
34 INTEREST INCOME
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended September March September March September June September 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2020 30, 2019 - on debentures (refer note 1.25 6.04 20.45 7.29 26.69 47.03 73.72 49) - on fixed deposits 76.33 94.19 42.09 170.52 29.75 110.05 139.80 - on security deposits 1.18 1.71 14.16 2.89 2.01 44.85 46.86 - on other statutory 3.13 4.50 5.49 7.63 10.91 10.86 21.77 deposits - on income-tax refund 20.62 11.62 4.81 32.24 8.00 18.31 26.31 - others 108.90 166.53 0.01 275.43 168.68 0.21 168.89 211.41 284.59 87.00 496.00 246.04 231.31 477.35
35 OTHER INCOME
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended September March September March September June September 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2020 30, 2019 Net changes in fair value of - - - - - 18.45 18.45 financial assets Liabilities no longer required - 4.59 1.10 4.59 12.19 1.10 13.29 written back Profit on sale of mutual funds 16.84 24.18 75.76 41.02 273.44 86.52 359.96 Miscellaneous 4.05 16.70 11.10 20.75 93.41 27.89 121.30 20.89 45.47 87.96 66.36 379.04 133.96 513.00
Half-Yearly Report 2020-21 185 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated) 36 COST OF MATERIALS CONSUMED For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended September March September March September June September 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2020 30, 2019 Purchases 3.71 0.59 24.47 4.30 70.57 55.77 126.34 Add: Increase/(decrease) in 1.15 0.50 5.20 1.65 (1.69) (5.71) (7.40) inventory 4.86 1.09 29.67 5.95 68.88 50.06 118.94
37 EMPLOYEE BENEFITS EXPENSE * For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended September March September March September June September 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2020 30, 2019 Salaries and wages 42.46 54.48 63.65 96.94 159.25 136.63 295.88 Contribution to provident 4.04 0.19 4.61 4.23 7.56 10.06 17.62 and other funds Staff welfare 4.85 5.04 15.70 9.89 32.26 31.41 63.67 51.35 59.71 83.96 111.06 199.07 178.10 377.17 * refers to employee benefits expense of the hospitality segment (also refer note 48)
38 OPERATING AND MAINTENANCE EXPENSES For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended September March September March September June September 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2020 30, 2019 Power and fuel (net) 81.95 54.11 162.78 136.06 264.85 344.31 609.16 Operating consumables 1.11 - 5.58 1.11 7.45 10.85 18.30 83.06 54.11 168.36 137.17 272.30 355.16 627.46
39 OTHER EXPENSES For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended September March September March September June September 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2020 30, 2019 Property tax (net) 176.53 179.13 168.31 355.66 365.65 338.36 704.01 Rates and taxes 12.98 16.08 7.08 29.06 22.87 15.03 37.90 Marketing and advertising 13.72 19.64 17.29 33.36 49.86 27.45 77.31 expenses Assets and other balances 9.30 4.19 0.27 13.49 6.20 4.96 11.16 written off Allowances for credit loss - - - - 0.59 0.26 0.85 Reversal of impairment on - - - - (156.98) - (156.98) investments Investments written off - - - - 156.98 - 156.98 Bank charges 5.09 0.71 4.96 5.80 10.17 9.25 19.42 Brokerage and commission - 0.58 6.15 0.58 12.17 11.93 24.10 Net changes in fair value of - 3.00 - 3.00 25.16 - 25.16 financial assets Travel and conveyance 2.90 2.56 6.10 5.46 12.75 13.03 25.78 Corporate Social 12.42 0.01 12.18 12.43 65.73 20.18 85.91 Responsibility (CSR) contribution Miscellaneous expenses 19.99 18.58 78.01 38.57 106.80 127.93 234.73 252.93 244.48 300.35 497.41 677.95 568.38 1,246.33
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(all amounts in ` million unless otherwise stated) 40 REPAIRS AND MAINTENANCE
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended September March September March September June September 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2020 30, 2019 Repairs and maintenance - common area 153.99 175.05 193.71 329.04 369.64 366.11 735.75 maintenance - buildings 12.76 15.49 18.55 28.25 15.92 60.27 76.19 - machinery 54.57 63.52 67.69 118.09 120.94 132.57 253.51 - others 27.47 31.68 34.44 59.15 89.65 60.28 149.93 248.79 285.74 314.39 534.53 596.15 619.23 1,215.38
41 FINANCE COSTS (NET OF CAPITALISATION) **
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended September March September March September June September 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2020 30, 2019 Interest expense - on borrowings from banks 185.17 189.71 6.42 374.88 113.70 196.45 310.15 and financial institutions - on deferred payment 204.26 205.79 211.02 410.05 416.71 423.48 840.19 liability - on lease deposits 75.69 75.88 81.97 151.57 142.97 169.12 312.09 - on Non convertible 33.99 - - 33.99 - - - debentures (Tranche A of Embassy REIT Series II NCD 2020) - on lease liabilities 12.42 5.83 15.60 18.25 15.60 15.60 31.20 - accrual of premium on 925.80 895.33 507.62 1,821.13 1,459.53 850.38 2,309.91 redemption of debentures * 1,437.33 1,372.54 822.64 2,809.87 2,148.51 1,655.03 3,803.54
* relates to accrual of premium on redemption of Tranche I and Tranche II of Embassy REIT Series I NCD 2019
** Gross interest expense is `1,515.43 million and `2,962.86 million and interest capitalised is `78.10 million and `152.99 million for the quarter and half year ended September 30, 2020 respectively. 42 DEPRECIATION AND AMORTISATION
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended September March September March September June September 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2020 30, 2019 Depreciation of property, 167.79 166.95 201.61 334.74 350.97 356.71 707.68 plant and equipment Depreciation of investment 985.65 972.15 1,215.92 1,957.80 2,013.48 2,398.84 4,412.32 property Amortisation of intangible 39.74 39.50 26.79 79.24 81.17 80.07 161.24 assets 1,193.18 1,178.60 1,444.32 2,371.78 2,445.62 2,835.62 5,281.24
Half-Yearly Report 2020-21 187 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated) 43 TAX EXPENSE#
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended September March September March September June September 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2020 30, 2019 Current tax* 392.75 387.17 227.01 779.92 765.01 596.38 1,361.39 Deferred tax charge (224.20) (77.71) (440.69) (301.91) 271.35 (282.62) (11.27) Minimum Alternate Tax credit (149.54) (150.25) (84.90) (299.79) (757.53) (292.59) (1,050.12) entitlement (MAT)** MAT written off/ (written - - 150.75 - (150.75) 150.75 - back) 19.01 159.21 (147.83) 178.22 128.08 171.92 300.00
* includes dividend distribution tax of `22.83 million payable by SPVs on dividend distributed to Group for the year ended March 31, 2020. Also includes current tax adjustments relating to earlier years of `42.32 million for the year ended March 31, 2020.
** including MAT credit entitlement relating to earlier years of `373.69 million for the year ended March 31, 2020.
# The Government of India had introduced the Taxation Laws (Amendment) Ordinance, 2019 (“Ordinance”), announcing changes to corporate tax rates in the Income Tax Act, 1961, with effect from April 1, 2019. Existing Companies had been provided an option to pay income tax at a concessional rate of 22%, subject to conditions prescribed therein in the Ordinance. Further, the Minimum Alternate Tax rate has been reduced from 18.5% to 15% (excluding surcharge and cess). Embassy Office Parks Group based on its internal assessment had provisionally decided to opt for concessional income tax rate for certain of its SPVs. Further, as clarified by Central Board of Direct Taxes, Minimum Alternate Tax credit balance for such SPVs amounting to `150.75 million had been written off to the Consolidated Statement of Profit and Loss for the period ended September 30, 2019. Further, based on the amendments to the Finance Bill, 2020 dated March 2020, such SPV’s have not opted for such concessional tax rate under Section 115BAA of the IT Act. Accordingly, for the period ended March 31, 2020, the additional current tax expense amounts to `151.32 million, MAT write off as stated above of `150.75 million had been reinstated and additional deferred tax liability of `212.70 million had been recorded during the quarter ended March 31, 2020.
44 EARNINGS PER UNIT (EPU) Basic EPU amounts are calculated by dividing the profit for the period/ year attributable to Unitholders by the weighted average number of units outstanding during the period/ year. Diluted EPU amounts are calculated by dividing the profit attributable to Unitholders by the weighted average number of units outstanding during the period/ year plus the weighted average number of units that would be issued on conversion of all the dilutive potential units into unit capital.
The following reflects the profit and unit data used in the basic and diluted EPU computation
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended ended ended ended September March September March September June September 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2020 30, 2019 Profit after tax for 2,325.65 2,042.39 2,322.39 4,368.04 3,112.58 4,542.76 7,655.34 calculating basic and diluted EPU Weighted average 771.67 771.67 771.67 771.67 771.67 771.67 771.67 number of Units (No. in million) Earnings Per Unit - Basic (Rupees/unit) 3.01 2.65 3.01 5.66 4.03 5.89 9.92 - Diluted (Rupees/ 3.01 2.65 3.01 5.66 4.03 5.89 9.92 unit)*
* The Trust does not have any outstanding dilutive units
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(all amounts in ` million unless otherwise stated)
45 MANAGEMENT FEES cash or in Units or a combination of both, at the Property Management Fee discretion of the Manager. The fees has been Pursuant to the Investment Management determined for undertaking management of the Agreement dated June 12, 2017 as amended, REIT and its investments. REIT Management Manager is entitled to fees @ 3% of the collection fees accrued for the quarter and half year ended of Facility Rentals per annum of the relevant September 30, 2020 amounts to `54.85 million. property in respect to operations, maintenance, and `113.46 million respectively. There are no administration and management of the Holdco changes during the period in the methodology or the SPV, as applicable. The fees has been for computation of fees paid to Manager. determined to meet the ongoing costs of the Manager to undertake the services provided Secondment fees to the Embassy REIT and its SPVs. Property Pursuant to the Secondment Agreement dated 11 Management fees for the quarter and half year March 2019, Manager is entitled to fees of Rupees ended September 30, 2020 amounts to `118.66 One Lakh (`1,00,000) per month in respect certain million and `235.17 million respectively. There are employees of Manager being deployed to the no changes during the period in the methodology Embassy office Parks REIT in connection with the for computation of fees paid to Manager. operation and management of the assets of the Embassy REIT. Secondment Fees for the quarter REIT Management Fees and half year ended September 30, 2020 amounts Pursuant to the Investment Management to `0.35 million and `0.70 million respectively. Agreement dated June 12, 2017, as amended, There are no changes during the period in the Manager is entitled to fees @ 1% of REIT methodology for computation of secondment Distributions which shall be payable either in fees paid to Manager.
46 COMMITMENTS AND CONTINGENCIES As at As at Particulars September 30, 2020 March 31, 2020 Capital commitments Estimated amount of contracts remaining to be executed on capital account (net of 11,247.07 11,088.92 advances) and not provided for (Refer note i) Contingent liabilities Claims not acknowledged as debt in respect of Income Tax matters (Refer note ii) 444.57 447.56 Claims not acknowledged as debt in respect of Service Tax matters (Refer note iii) 730.10 730.10 Claims not acknowledged as debt in respect of Property Tax matters (Refer note iv) 3,313.08 3,313.08 Others (Refer notes v and vi)
Based on information available as of date of reporting and basis expert opinion obtained by the Group, no provisions have been made for above claims during the period. The Group will continue to monitor developments to identify significant uncertainties and changed in estimates, if any, in future period.
Notes: i) Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for As at As at SPV September 30, 2020 March 31, 2020 MPPL 9,488.34 9,519.23 OBPPL 149.27 51.78 EOPPL 1,493.64 1,423.43 Others 115.82 94.48 11,247.07 11,088.92
Half-Yearly Report 2020-21 189 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
ii) Claims not acknowledged as debt in respect of Income Tax matters As at As at SPV September 30, 2020 March 31, 2020 MPPL 8.50 8.50 EOPPL 246.44 246.44 QBPL 77.60 77.60 QBPPL 3.76 3.76 OBPPL 69.83 72.82 IENMPL 38.44 38.44 444.57 447.56
MPPL: demand stayed. Accordingly, the SPV has (a) The SPV has received Section 153A disclosed `172.28 million (March 31, 2020: assessment orders for AY 2009-10 to `172.28 million) as contingent liability. 2015-16 making additions under section 14A of Income Tax Act read with rule 8D b) The SPV was assessed u/s. 143(3) of of the Income-tax Rules in computing the Income Tax Act for AY 2017-18 taxable income under the Income tax Act. and received assessment order dated The SPV has received demand orders December 24, 2019 with additions to pay a sum of `8.22 million for the made u/s.14A of the Income Tax Act assessment period. Appeals were filed read with rule 8D of the Income-tax before CIT(A) challenging the assessment Rules and addition to the income based orders. As at September 30, 2020 the on reconciliation differences between CIT(A) has dismissed the appeals for Form 26AS and the books of accounts. AY 09-10, 11-12 and 12-13 upholding the Aggrieved by the assessment order, the assessment additions made. MPPL has SPV has filed an appeal with CIT(A). challenged the CIT(A) orders and filed Accordingly, the SPV has disclosed `74.17 appeals before Income-tax Appellate million (March 31, 2020: `74.17 million) as Tribunal [‘ITAT’]. Accordingly, the SPV contingent liability. has disclosed `8.22 million (March 31, 2020: `8.22 million) as contingent QBPL: liability. a) The SPV was assessed under section 143(3) of the Income Tax Act and has (b) The SPV was originally assessed u/s. received a demand notice of `71.71 143(3) for AY 2009-10 apart from the million for AY 2010-11, on account of assessment u/s. 153A as disclosed above denial of benefit under section 80IAB for in (a) for disallowance under section 14A certain incomes as claimed by the SPV. of Income Tax Act read with rule 8D of The CIT(A) has passed necessary order the Income-tax Rules in computing the upholding the stand of the Assessing taxable income under the Income tax Officer. The SPV thereafter filed an Act. The SPV has received outstanding appeal with ITAT against the said order of demand orders to pay a sum of `0.28 CIT(A). The ITAT has disposed the appeal million. As at September 30, 2020 the in favor of the SPV. Subsequent to this, appeal against order of ITAT is pending Income tax Department has moved to for hearing before Hon’ble High Court Hon’ble High Court of Mumbai against of Karnataka. Accordingly, the SPV has the ITAT order. Accordingly, the SPV has disclosed `0.28 million (March 31, 2020: disclosed the above demand of `71.71 `0.28 million) as contingent liability. million (March 31, 2020: `71.71 million) as a contingent liability. EOPPL: a) The SPV was assessed u/s. 143(3) of b) The SPV was assessed for AY 2014-15 the Income Tax Act for AY 2016-17 u/s. 143(3) of the Income Tax Act with and received assessment order dated disallowance of loan processing fees December 31, 2018 with additions made which was accepted by the SPV. No u/s.14A of the Income Tax Act with a tax appeal was preferred and as a result demand of `172.28 million. The SPV has a penalty order u/s. 271(1)(c) of the filed an appeal against the assessment Act with demand of `5.89 million was order at the CIT (A) and has paid `14.06 received. While the said demand has million under protest with balance been paid, the SPV has contested this
190 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
demand and filed an appeal with CIT(A) IENMPL: against the said order. Accordingly, the (a) The SPV was reassessed u/s 147 read SPV has disclosed the above demand with section 143(3) of Income-tax Act, of `5.89 million (March 31, 2020: `5.89 1961 for the AY 2010-11 and addition on million) as a contingent liability. account of unexplained cash deposits was made u/s.69A of the Act, resulting QBPPL: in tax demand of `2.98 million. The The SPV had received an assessment order SPV has filed an appeal before CIT(A). u/s. 143(3) of the Income Tax Act for AY 2015- Accordingly, the SPV has disclosed `2.98 16 with 14A disallowance, certain expense million (March 31, 2020: `2.98 million) as disallowances and short grant of TDS credit contingent liability. resulting in demand of `3.76 million. An appeal against the assessment order was filed (b) The SPV received an assessment order before CIT(A) and the same is in the process u/s 143(3) of Income-tax Act, 1961 for of hearing. Penalty proceedings have been the AY 2011-12 and certain additions initiated. Accordingly, the SPV has disclosed were made and accepted by the SPV. the above demand of `3.76 million (March 31, No appeal was preferred and as a result 2020: `3.76 million) as a contingent liability. a penalty order u/s. 271(1)(c) of the Act with demand of `12.14 million was OBPPL: received. The SPV has filed an appeal a) The SPV had received an assessment before CIT(A). Accordingly, the SPV has order u/s. 143(3) of the Income Tax Act disclosed `12.14 million (March 31, 2020: for AY 2011-12 and received a tax demand `12.14 million) as contingent liability. notice of `69.83 million for Assessment Year 2011-12 wherein the Assessing (c) The SPV received an assessment order Officer had disallowed the profit earned u/s 143(3) of Income-tax Act, 1961 for by the SPV on transfer of the land at the AY 2012-13 and certain additions a value which was in excess of its fair were made and accepted by the SPV. value and claimed as deduction under No appeal was preferred and as a result Section 80IAB. The SPV contested the a penalty order u/s. 271(1)(c) of the said demand and had filed an appeal with Act with demand of `14.07 million was the CIT(A) against the said order. The received. The SPV has filed an appeal CIT(A) had disposed the appeal in favor before CIT(A). Accordingly, the SPV has of the SPV. Income Tax Department filed disclosed `14.07 million (March 31, 2020: an appeal with ITAT against the order ` 14.07 million) as contingent liability. of CIT(A) which is currently pending for disposal. Accordingly, the SPV has (d) The SPV received a tax demand notice of disclosed the above demand of `69.83 `9.25 million for Assessment Year 2014- million (March 31, 2020: `69.83 million) 15 wherein the Assessing Officer had as a contingent liability. disallowed municipal tax paid claimed against Income from House property b) The SPV has received an assessment and additions made u/s.14A of the order u/s. 143(3) of the Income Tax Act Income tax Act read with Rule 8D of the for AY 2017-18 wherein the Assessing Income Tax Rules. The SPV contested Officer has not given credit of withholding the said demand and had file and appeal taxes in respect of merged entities. with the CIT(A) against the said order. Subsequently, the SPV filed both an Accordingly, the SPV has disclosed `9.25 application for rectification for apparent million (March 31, 2020: `9.25 million) as error on record with the Assessing Officer contingent liability. and an appeal against the assessment order with CIT(A). During the current period, the Assessing Officer has allowed the TDS credit through rectification order issued an order in favor of the SPV and accordingly, the SPV has disclosed ` Nil (March 31, 2020: `2.99 million) as contingent liability.
Half-Yearly Report 2020-21 191 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
iii) Claims not acknowledged as debt in respect of Service Tax and Value Added Tax matters As at As at SPV September 30, 2020 March 31, 2020 MPPL 573.90 573.90 ETPL 64.73 64.73 GSPL 23.99 23.99 VCPPL 40.66 40.66 UPPL 26.82 26.82 730.10 730.10
MPPL: (a) The SPV had received Order-in-original the SPV has filed an appeal before the dated December 23, 2015 with a Commissioner of Central Excise (Appeals demand to pay a sum of `522.04 million - I), Kolkata which directed the SPV to (including interest and penalty) from make a pre-deposit of `1.33 million to stay the Commissioner of Central Excise the recovery of the balance amount. The Bangalore-V Commissionerate towards same has been paid by the SPV under incorrectly availed Cenvat credit during protest and such appeal is currently the period April 1, 2006 to March 31, pending for disposal. Accordingly, the 2012. Appeal has been filed before aforementioned demand and penalty CESTAT dated April 18, 2016. The appeal amount of `35.68 million (March 31, is still pending before CESTAT and the 2020: `35.68 million) has been disclosed amount of `522.04 million (March 31, as a contingent liability. 2020: `522.04 million) is disclosed as contingent liability. (b) SPV has received an Order from Joint Commissioner, Service Tax - I, Kolkata (b) The SPV had received an order in January 2020, demanding `14.52 dated May 26, 2011 from Assistant million in respect of denial of input tax Commissioner of Commercial Taxes for credit during construction period for the rejecting the refund of `51.86 million financial years 2014-15 to 2016-17 (along towards incorrectly availed VAT input with penalty of equal amount). Against credit during the period April 1, 2009 to the aforesaid Order, the SPV has filed March 31, 2010. Appeal was filed before an appeal before the Commissioner of Karnataka Appellate Tribunal (briefly Central Excise (Appeals - I), Kolkata which “KAT”) which allowed the refund in part. directed the SPV to make a pre-deposit The SPV approached Hon’ble High Court of `1.09 million to stay the recovery of the of Karnataka which quashed the order balance amount. The same was paid by passed by KAT and granted full refund. the SPV under protest. During the period The State of Karnataka has filed an appeal ended September 30, 2020, the SPV in the Supreme Court against the High has disclosed the demand and penalty Court order. Accordingly, a sum of `51.86 amount of `29.05 million (March 31, 2020: million (March 31, 2020: `51.86 million) `29.05 million) as contingent liability. has been disclosed as contingent liability. GSPL: ETPL: The SPV had received an Order-in-Original (a) The SPV has received an Order from Joint passed by the Commissioner, Customs, Central Commissioner, Service Tax - I, Kolkata Excise and Service Tax Commissionerate, for the period 2012-13 in respect of non- Noida for the period FY 2007-08 to 2010-11 registration and non-payment of service demanding `11.99 million (along-with penalty tax under the category of ‘Builder’s of equal amount) in respect of inclusion of Special Services’ and not ‘Construction of notional interest accrued on security deposit Immovable Property’ service with regard in the taxable value. Against the aforesaid to installation of parking equipment Order, the SPV had filed an appeal before which is taxable as a service leading to the Hon’ble Customs, Excise and Service ineligibility of abatement of ` 10.01 million, Tax Appellate Tribunal which directed the irregular availment of credit of `6.87 SPV to make a pre-deposit of `0.90 million million and non-payment of service tax of to stay the recovery of the balance amount. `0.96 million (along with penalty of equal The same was paid by the SPV under protest. amount). Against the aforesaid Order, During the previous year FY 17-18, the SPV
192 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
had received a favorable order and the said UPPL: demand was annulled and the pre-deposit has a) The SPV had received show cause notices been refunded; however, the Commissioner dated 3 July 2015 for demand due to Excise has filed an appeal against the Order to irregular cenvat credit availed for ` 23.04 Hon’ble High Court of Allahabad. Accordingly, million relating to period from April 1, the SPV has disclosed the demand and 2011 to March 31, 2016. Responses have penalty amount of `23.99 million (March 31, been filed in August 2017 and is pending 2020: `23.99 million) as contingent liability. before the Commissioner of Service Tax. Accordingly, the aforementioned VCPPL: demand of `23.04 million (March 31, The SPV has received an order issued by 2020: `23.04 million) is disclosed as the Commissioner, Customs, Central Excise contingent liability. and Service Tax Commissionerate, Bombay demanding ` 29.91 million along-with penalty b) The SPV had received show cause notices of `10.75 million in respect of inclusion of dated April 9, 2019 for demand of `3.78 notional interest accrued on security deposit million relating to period from April 1, in the taxable value for the period FY 2012- 2014 to June 30, 2017 with respect to 2013 to 2014-2015. Against the aforesaid payment of salary and bonus to certain Order, the SPV had filed an appeal before employees of the SPV which has not the Hon’ble Customs, Excise and Service Tax been considered as Management fees. Appellate Tribunal which directed the SPV to Responses have been filed and is pending make a pre-deposit of `2.24 million to stay before the Commissioner of Service the recovery of the balance amount. The Tax. Accordingly, the aforementioned same was paid by the SPV under protest and demand of `3.78 million (March 31, 2020: such appeal is currently pending for disposal. `3.78 million) is disclosed as contingent Accordingly, the said demand of `40.66 liability. million (March 31, 2020: `40.66 million) has been disclosed as contingent liability.
iv) Claims not acknowledged as debt in respect of Property Tax matters As at As at SPV September 30, 2020 March 31, 2020 MPPL 3,313.08 3,313.08 3,313.08 3,313.08
MPPL: the Act and Rules. The SPV filed a writ (a) The SPV has received a demand order petition against the demand order which dated October 5, 2015 to pay a sum of has been dismissed by the Hon’ble High `2,739.49 million (including penalty and Court of Karnataka. The said court interest upto June 2016) towards the upheld the demand made by BBMP. difference in property tax payable by the Against the order passed by single judge SPV, which difference arose on account for the dismissal of writ petition, MPPL of classification of the property under has based on external legal opinion filed different schedules for the purpose an appeal before the aforementioned of computing property taxes, for the court and the same has been admitted period 2008-09 to 2015-16. The SPV is by the court on 27 June 2016. The contesting that the concerned property Hon’ble High Court restrained BBMP being an industrial estate that has been from taking any coercive action against developed as special economic zone the SPV and also directed BBMP to allow must be classified as category XIV the SPV to make payment of property as per the notification issued under tax for the assessment year 2016-17. The Karnataka Municipal Corporation Act, matter is currently pending and as of the 1976 (‘the Act’) and Bruhat Bengaluru date of these financial statements, no Mahanagar Palike Property Tax Rules, further developments have taken place. 2009 (‘Rules’). Whereas, the Assistant Accordingly, this has been disclosed as a Revenue Officer has been considering contingent liability. The SPV paid `646.69 the concerned property under category million (March 31, 2020: `646.69 million) VIII as per the notification issued under under protest against the above demand.
Half-Yearly Report 2020-21 193 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
(b) The SPV has also received demand tax losses have been adjusted against notices dated October 9, 2017 to pay a the aforesaid disallowances. The total sum of `760.07 million including penalty disallowance amount under dispute as of that date towards the differential for all years put together is `907.40 property tax based on the total survey million. GLSP has filed an appeal before report for certain blocks for the period the Hon’ble High Court of Karnataka 2008-09 to 2017-18. An appeal had been on these matters. GLSP has obtained filed before the Joint Commissioner, external legal opinion on this matter BBMP, Bytarayanapura, Bangalore and accordingly disclosed the same as a (“Joint Commissioner”) objecting the contingent liability. total survey report and property tax assessment notice arising therefrom. b) GLSP has received a Tribunal order for New demand notices dated January 17, AY 2005-06 to 2007-08, remanding 2019 were issued to pay a sum of `860.39 back the case to CIT(A) with respect million (including penalty) towards the to the issue of disallowance on interest differential property tax for the period paid towards loans allegedly used for 2008-09 to 2017-18 and interest upto on-lending to certain parties. There are the date of payment as per the demand currently no tax dues outstanding for notices. The SPV submitted a letter to the each of the years under consideration as Joint Commissioner dated 29 March 2019 past year tax losses have been adjusted referring to the appeals preferred by the against the aforesaid disallowances. The SPV and had paid a sum of `286.80 million total disallowance amount under dispute towards property tax demanded under for all relevant years put together is protest. An order was passed by the Joint `15.40 million and accordingly the same Commissioner dismissing the appeal is disclosed as a contingent liability by preferred by the SPV. Against the order GLSP. passed by the Joint Commissioner, MPPL has, based on external legal opinion, filed c) GLSP has received a CIT(A) order for a writ petition before the Hon’ble High AY 2014 -15, with respect to the issue of Court of Karnataka on August 3, 2020 disallowance on interest paid towards on various grounds, inter alia, that the loans allegedly used for on-lending to rates BBMP has relied on to calculate certain parties. There are currently no property tax in the said demand notices tax dues outstanding for each of the dated October 9, 2017 has been already years under consideration as past year challenged in a writ appeal filed by the tax losses have been adjusted against SPV and pending before Hon’ble High the aforesaid disallowances. The total Court of Karnataka as mentioned in note disallowance amount is `252.04 million. iv(a) above. Accordingly, a net contingent GLSP had filed an appeal before the liability of `573.59 million (March 31, ITAT on these matters and ITAT also 2020: `573.59 million) has been disclosed upheld the order of CIT(A). Aggrieved by in these financial statements ITAT order, appeal was filed before the Honorable High Court of Karnataka and v) Others: tax matters pertaining to equity accordingly the same is disclosed as a accounted investee company contingent liability. (a) GLSP (50% equity accounted investee - joint venture) Income Tax matters: d) During the year ended March 31, 2020, a) GLSP has received a Tribunal order GLSP has received assessment order for for AY 2007-08 to 2013-14 upholding AY 2017-18 for disallowance under section the taxability of interest income basis 14A of Income Tax Act read with rule 8D information in the Annual Information of the Income-tax Rules, Disallowance of Return (for AY 2007-08 only), upholding claim under section 80G of the Income the disallowance on interest paid towards Tax Act and addition to the income based loans allegedly used for onward lending on differences between Form 26AS and to certain parties and remanding the the books of accounts. GLSP has filed an issue of disallowance on interest paid appeal against the assessment order with towards such loans. There are currently CIT(A). Accordingly, GLSP has disclosed no tax dues outstanding for each of the `2.83 million (March 31, 2020: ` 2.83 years under consideration as past year million) as contingent liability.
194 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
(b) GLSP (50% equity accounted investee - demand notice alleges that unpaid joint venture) Service Tax matters : amounts (categorized as operational a) GLSP has received show cause notice debts) aggregating up to `1,008.10 and order-in-original dated August 14, million are due to the sub-contractor 2011 and December 11, 2011 to pay a directly from EEPL for the various works sum of `111.86 million from Office of the claimed to have been undertaken at the Commissioner of Service tax towards site of Embassy Energy, on the basis of wrongly availed Cenvat credit during certain correspondence with EEPL. The the period April 1, 2009 to March 31, 2011. demand notice requires payment within Appeal has been filed before CESTAT. 10 days of the letter, failing which the As at September 30, 2020 the appeal is subcontractor may initiate a corporate pending before CESTAT for hearing and insolvency resolution process against accordingly the same is disclosed as a EEPL. EEPL has by its letter dated 1 contingent liability by GLSP. March 2019, refuted all such claims inter alia on the basis that the payments are b) GLSP has received an Order-in-Original due from ISPL (and/ or its parent entity) dated August 31, 2010 to pay a sum to the sub-contractor and not from of `90.49 million from Office of the EEPL, and therefore the sub-contractor Commissioner of Service tax towards has no claim against EEPL. By its letters wrongly availed Cenvat credit during dated March 18, 2019, the subcontractor the period June 2007 to March 2009. has responded to the letter from EEPL, Appeal was filed before CESTAT and denying all statements made by EEPL a favorable order was received by the and reiterating that the unpaid amounts entity. Commissioner of Service Tax has are due from EEPL. The sub-contractor filed an appeal before Hon’ble High Court has thereafter filed an application of Karnataka and their application is under Section 9 of the Code before the pending for acceptance and accordingly Bangalore bench of National Company the same is disclosed as a contingent Law Tribunal claiming debt of `997.59 liability by GLSP. million and interest thereon against EEPL. During the year ended March 31, vi) Other matters 2020, the third party sub-contractor vide (a) VCPPL (Forfeiture of security deposit a letter dated January 2, 2020 served the matters): Orange Business Services notice of hearing in the captioned matter India Technology Private Limited, earlier for initiation of insolvency proceedings known as Equant Technologies Services under section 9 of the IBC before the (India) Private Limited (“Equant’) had NCLT, Bengaluru pursuant to its order filed a summary suit bearing No. 388 dated December 16, 2019. The petitioner of 2012 with the Hon’ble Bombay High has filed a claim as an operational creditor Court alleging that the SPV incorrectly of IEDCL for an amount of `1,008.10 terminated the letter of intent dated July million dues to the sub-contractor. The 18, 2008 executed between the SPV and matter is in the preliminary hearing stage Equant for renting premises in Embassy before the NCLT, Bengaluru and pending 247 Park pursuant to which Equant paid resolution. SPV intends to contest the to the SPV a security deposit of `40.32 claim before NCLT. SPV based on the million, which was withheld by the SPV external legal opinion obtained on this on account of breach of agreed terms matter has disclosed the same as a of the said letter of intent. The matter is contingent liability. currently under adjudication. EEPL : (b) EEPL : SPV received a demand notice The Karnataka Electricity Regulatory under the Insolvency and Bankruptcy Commission, Bengaluru (KERC) has Code, 2016 (IBC) on February 28, issued orders in 2005, 2008 and 2014 2019 from a third party subcontractor, granting exemption to all solar power engaged by IL&FS Development generators in Karnataka that achieved Company (IEDCL), the parent company commercial operation date between of IL&FS Solar Power Limited (‘ISPL’), April l, 2013 and March 31, 2018 from which was itself engaged by ISPL as a paying certain charges such as payment contractor for Embassy Energy. The of wheeling and banking charges, cross
Half-Yearly Report 2020-21 195 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
subsidy surcharges, transmission losses generators were reduced from a period and wheeling losses for a period of ten of one year to six months, and restrictions years from the date of commissioning. were imposed on the extent of banked KERC has issued an order dated May 14, energy which could be withdrawn 2018 withdrawing the aforementioned during the peak time of day. EEPL filed exemption available to Karnataka’s a writ petition against the Karnataka power generators, including EEPL. Electricity Regulatory Commission and others before the Hon’ble High Court of The SPV commissioned the solar plant Karnataka. The Hon’ble High Court of during the FY 2017-2018 and as per the Karnataka pursuant to an order dated previous Regulation, the charges did August 9, 2018 granted an interim stay not apply to the SPV for a period of 10 on the commission’s order. Pursuant to years. The SPV filed a writ petition with an order dated July 24, 2019, the Hon’ble the Hon’b1e High Court of Karnataka High Court of Karnataka has allowed the challenging the KERC Order and writ petition and quashed the order dated obtained an interim Stay Order dated January 9, 2018 issued by the Karnataka May 24, 2018. BESCOM filed preliminary Electricity Regulatory Commission with statement of objections and also filed a direction to Karnataka Electricity application seeking recalling of interim Regulatory Commission to reconsider order. The application seeking recalling the matter. However, KERC has filed a of interim order was rejected. The Hon’ble common Writ Appeal against EEPL and High Court passed the judgment on 13 others before the Division Bench of High March 2019 allowing the Writ Petition Court and is currently pending disposal. and quashed the order dated May 14, No Appeal has been filed challenging the 2018 passed by KERC. The SPV has filed said order dated July 24, 2019 by virtue Caveat Petition for receiving notifications of which the Writ Petition of EEPL was in case any suit / appeal is filed by any of allowed and the order dated January 9, the parties to the said petition. KERC has 2018 of KERC was quashed. filed a common writ appeal against the order dated 13 March 2019 against EEPL (c) MPPL : SPV has filed a writ petition in 2015 and Others. However, ESCOMS have also against the BBMP and others seeking to inter- filed Writ Appeals against some of the alia, quash (i) a circular from 2014 re-fixing the petitioners, but no appeal has been filed improvement charges under the Karnataka against EEPL, In the event an adverse Municipal Corporations Act, 1976, and the order is passed in the said appeal made Karnataka Municipal Corporations (Recovery by ESCOMS, EEPL may also be affected. of Improvement Expenses) Rules, 2009, and (ii) a notice from 2015 demanding payment EEPL : of betterment charges of `127.9 million. In The Karnataka Electricity Regulatory 2016, the Hon’ble High Court of Karnataka Commission has issued an order in 2018 has granted an interim stay on the impugned pursuant to which banking facilities circular and notice. available to non-renewable energy certificate based renewable energy
196 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated) 47 FINANCIAL INSTRUMENTS - FAIR VALUES A The carrying value and fair value of financial instruments by categories are as below:
Carrying value Fair Value Carrying value Fair Value Particulars September September March 31, 2020 March 31, 2020 30, 2020 30, 2020 Financial assets Amortised cost Loans 720.05 - 720.20 - Trade receivables 237.12 - 242.25 - Cash and cash equivalents 13,174.15 - 3,249.16 - Other bank balances 108.79 - 169.79 - Receivable under finance lease - - - - Other financial assets 1,874.68 - 1,588.00 - Investments in debentures - - 724.38 - Fair value through profit and loss Investments in mutual funds - - 11,549.21 11,549.21 Total assets 16,114.79 - 18,242.99 11,549.21 Financial liabilities Amortised cost Borrowings (including current maturities of 5,194.48 - 11,163.28 - long-term debt) - floating rates Borrowings (including current maturities of 55,643.62 56,841.50 46,297.56 46,243.74 long-term debt) - fixed rates Lease deposits 9,998.05 - 9,497.57 - Trade payables 188.62 - 254.75 - Other financial liabilities 2,321.02 - 2,893.54 - Total liabilities 73,345.79 56,841.50 70,106.70 46,243.74
The fair value of cash and cash equivalents, Level 1: Level 1 hierarchy includes financial fixed deposits, trade receivables, investment in instruments measured using quoted prices. This debentures, borrowings at floating rates, lease includes listed equity instruments, traded bonds deposits, trade payables, loans and other financial and mutual funds that have quoted price. The fair assets and liabilities approximate their carrying value of all equity instruments (including bonds) amounts and hence the same has not been which are traded in the stock exchanges is valued disclosed in the table above. using the closing price as at the reporting period. The mutual funds are valued using the closing B. Measurement of fair values NAV. The section explains the judgement and estimates made in determining the fair values of the financial Level 2: The fair value of financial instruments that instruments that are: are not traded in an active market (for example, traded bonds, over-the counter derivatives) is a) recognised and measured at fair value determined using valuation techniques which maximise the use of observable market data b) measured at amortised cost and for which and rely as little as possible on entity-specific fair values are disclosed in the financial estimates. If all significant inputs required to fair statements. value an instrument are observable, the instrument is included in Level 2. To provide an indication about the reliability of the inputs used in determining fair value, the Group has Level 3: If one or more of the significant inputs classified its financial instruments into the three is not based on observable market data, the levels prescribed under the accounting standard. instrument is included in Level 3. An explanation of each level is mentioned below:
Half-Yearly Report 2020-21 197 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
Financial instruments Quantitative disclosures fair value measurement hierarchy for assets as at:
Particulars Date of valuation Total Level 1 Level 2 Level 3 Financial assets measured at fair value: FVTPL financial investments: Investment in mutual funds September 30, 2020 - - - - Investment in mutual funds March 31, 2020 11,549.21 11,549.21 - -
Transfers between Level 1, Level 2 and Level 3 assessment of the segment results. The same is There were no transfers between Level 1, Level 2 defined as follows: or Level 3 during the period ended September 30, 2020 and year ended March 31, 2020. a) Commercial Offices segment: NOI for commercial offices is defined as Determination of fair values revenue from operations (which includes Fair values of financial assets and liabilities (i) facility rentals, (ii) maintenance services have been determined for measurement and/ income, (iii) income from finance lease, or disclosure purposes based on the following and (iv) other operating income for methods. When applicable, further information Commercial Offices) less direct operating about the assumptions made in determining fair expenses (which includes (i) operating and values is disclosed in the notes specific to that maintenance expenses including common asset or liability. area maintenance expenses (ii) property taxes, (iii) rent, and (iv) insurance). i) The fair value of mutual funds are based on price quotations at reporting date. b) Hospitality segment: ii) The fair values of other current financial NOI for hospitality segment is defined as assets and financial liabilities are considered revenue from operations (which includes (i) to be equivalent to their carrying values. room rentals, (ii) sale of food and beverages, (iii) other operating income from hospitality) iii) The fair values of borrowings at fixed rates less direct operating expenses (which are considered to be equivalent to present includes (i) cost of materials consumed, (ii) value of the future contracted cashflows employee benefits expenses, (iii) operating discounted at the current market rate. and maintenance expenses excluding property management fees, and (iv) Other 48 OPERATING SEGMENTS expenses). Ind AS 108 establishes standards for the way that business enterprises report information about c) Other segment: operating segments and related disclosures. Based NOI for other segments is defined as revenue on the ‘management approach’ as defined in Ind AS from operations (which includes income 108, the Chief Operating Decision Maker (‘CODM’) from generation of renewable energy) less evaluates the Embassy Office Parks’ performance direct operating expenses (which includes (i) and allocates resources based on an analysis of operating and maintenance expenses and (ii) various performance indicators by operating other expenses). segments. The accounting principles used in the preparation of the Condensed Consolidated Certain income (such as interest, dividend Financial Statements are consistently applied and other income) and certain expenses to record revenue and expenditure in individual (such as Other expenses excluding segments and are as set out in the significant Direct operating expenses, depreciation, accounting policies. amortization, impairment and finance cost) are not specifically allocable to segments Operating segments of Embassy Office Parks and accordingly these expenses are adjusted Group are (i) Commercial Offices, (ii) Hospitality against the total income of the Embassy and (iii) Other segments. Other segments comprise Office Parks Group. Generation of Renewable Energy. Revenue and identifiable operating expenses in relation to Further, the information relating to segment segments are categorized based on items that are assets and segment liabilities are not regularly individually identifiable to that segment. provided to CODM for review and hence the same is not disclosed. Net Operating Income (‘NOI’) is the key metric reported to the CODM for the purposes of
198 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
Total For the For the For the For the For the half For the half For the quarter quarter quarter half year Particulars year ended year ended year ended ended ended ended ended March September March September June September September 31, 2020 30, 2019 31, 2020 30, 2020 30, 2020 30, 2019 30, 2020 Revenue from operations 5,401.50 5,162.26 5,206.04 10,563.76 10,892.14 10,557.08 21,449.22 Identifiable operating expenses (587.02) (593.72) (822.25) (1,180.74) (1,634.77) (1,644.91) (3,279.68) Net Operating Income (segment 4,814.48 4,568.54 4,383.79 9,383.02 9,257.37 8,912.17 18,169.54 results for the period/ year) Other operating expenses (317.12) (391.24) (364.84) (708.36) (798.71) (714.41) (1,513.12) Interest, dividend and other 232.30 330.06 174.96 562.36 625.08 365.27 990.35 income Earnings before finance costs, 4,729.66 4,507.36 4,193.91 9,237.02 9,083.74 8,563.03 17,646.77 depreciation, amortisation, impairment loss and tax Share of profit after tax of equity 245.51 245.38 247.61 490.89 527.03 642.30 1,169.33 accounted investees Depreciation and amortisation (1,193.18) (1,178.60) (1,444.32) (2,371.78) (2,445.62) (2,835.62) (5,281.24) expenses Impairment loss (Refer note ) - - - (1,775.98) - (1,775.98) Finance costs (1,437.33) (1,372.54) (822.64) (2,809.87) (2,148.51) (1,655.03) (3,803.54) Profit before tax 2,344.66 2,201.60 2,174.56 4,546.26 3,240.66 4,714.68 7,955.34 Tax expense (19.01) (159.21) 147.83 (178.22) (128.08) (171.92) (300.00) Other Comprehensive Income - - - - 0.16 - 0.16 Total comprehensive income for 2,325.65 2,042.39 2,322.39 4,368.04 3,112.74 4,542.76 7,655.50 the period/year
Commercial Offices For the For the For the For the For the half For the half For the quarter quarter quarter half year Particulars year ended year ended year ended ended ended ended ended March September March September June September September 31, 2020 30, 2019 31, 2020 30, 2020 30, 2020 30, 2019 30, 2020 Revenue from operations 5,016.49 4,739.37 4,562.47 9,755.86 9,408.89 9,300.69 18,709.58 Identifiable operating expenses (433.39) (433.47) (534.77) (866.86) (993.88) (1,088.09) (2,081.97) Net Operating Income (segment 4,583.10 4,305.90 4,027.70 8,889.00 8,415.01 8,212.60 16,627.61 results for the period/ year)
Hospitality For the For the For the For the For the half For the half For the quarter quarter quarter half year Particulars year ended year ended year ended ended ended ended ended March September March September June September September 31, 2020 30, 2019 31, 2020 30, 2020 30, 2020 30, 2019 30, 2020 Revenue from operations 29.87 17.95 310.76 47.82 638.18 535.21 1,173.39 Identifiable operating expenses (124.16) (129.39) (257.81) (253.55) (571.73) (496.26) (1,067.99) Net Operating Income (segment (94.29) (111.44) 52.95 (205.73) 66.45 38.95 105.40 results for the period/ year)
Other Segment For the For the For the For the For the half For the half For the quarter quarter quarter half year Particulars year ended year ended year ended ended ended ended ended March September March September June September September 31, 2020 30, 2019 31, 2020 30, 2020 30, 2020 30, 2019 30, 2020 Revenue from operations 355.14 404.94 332.81 760.08 845.07 721.18 1,566.25 Identifiable operating expenses (29.47) (30.86) (29.67) (60.33) (69.16) (60.56) (129.72) Net Operating Income (segment 325.67 374.08 303.14 699.75 775.91 660.62 1,436.53 results for the period/ year)
Half-Yearly Report 2020-21 199 Total Total 17.95 29.87 355.14 (111.44) 325.67 (94.29) 374.08 404.94 4,583.10 5,016.49 5,162.26 4,739.37 5,401.50 4,814.48 4,568.54 4,305.90 ------318.23 318.23 IENMPL IENMPL 349.66 333.62 366.55 333.62 349.66 366.55 ------210.12 210.12 VCPPL VCPPL 299.53 333.86 333.86 256.94 299.53 256.94 - - - - 1.59 14.55 QBPL QBPL 225.51 (78.61) 157.35 277.77 300.19 285.64 164.88 (60.63) 235.96 279.36 (all amounts(all stated) otherwise unless in ` million ------179.91 199.85 179.91 227.68 212.43 QBPPL QBPPL 227.68 212.43 199.84 ------OBPL OBPL 352.13 352.13 279.86 363.82 299.97 363.82 279.86 299.97 ------ETPL ETPL 231.73 261.47 231.73 261.47 230.59 260.00 230.59 260.00 ------GSPL GSPL 171.95 197.43 197.43 171.96 168.49 168.49 205.59 205.59 ------EEPL EEPL 355.14 355.14 325.67 374.08 374.08 325.67 404.94 404.94 ------UPPL UPPL 15.32 15.32 16.36 16.36 (32.83) (32.83) (33.66) (33.66) ------EOPPL EOPPL 320.37 331.90 308.74 322.35 320.37 331.90 322.35 308.74 ------MPPL MPPL 2,689.72 2,323.75 2,548.83 2,689.72 2,323.75 2,462.90 2,548.83 2,462.90 ------REIT REIT
Total Total Others Hospitality Segment Others Hospitality Segment Net Operating Income Income Operating Net results) (segment Segment Office Commercial Total Income Net Operating results) (segment Segment Office Commercial Total Others Others Hospitality Segment Hospitality Segment For the quarter ended June 30, 2020 Particulars Revenue: Segment Segment Office Commercial Notes theto Condensed Consolidated Financial Statements An analysis of SPV wise Segment Revenues and Segment Results is given below For the quarter ended September 30, 2020 Particulars Revenue: Segment Segment Office Commercial
200 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report Total Total 47.82 52.95 332.81 310.76 303.14 699.75 760.08 (205.73) 9,755.86 4,027.70 4,562.47 4,383.79 8,889.00 5,206.04 10,563.76 9,383.02 ------311.57 716.21 311.57 716.21 651.85 IENMPL 353.82 353.82 651.85 IENMPL ------VCPPL VCPPL million unless otherwise stated) otherwise unless million 315.08 315.08 364.96 509.65 364.96 590.80 590.80 509.65 - - - - 16.14 66.16 QBPL QBPL 563.41 (55.20) 461.48 429.61 290.27 363.45 235.07 579.55 (139.24) 322.24 (all amounts(all in ` ------440.11 QBPPL QBPPL 189.96 440.11 379.75 189.96 226.30 226.30 379.75 ------OBPL OBPL 334.11 334.11 715.95 715.95 579.83 236.92 236.92 579.83 ------ETPL ETPL 219.13 219.13 521.47 521.47 462.32 240.30 240.30 462.32 ------GSPL GSPL 161.66 161.66 222.23 222.23 340.45 403.02 403.02 340.45 ------EEPL EEPL 332.81 303.14 332.81 303.14 699.75 760.08 760.08 699.75 ------UPPL UPPL 31.68 31.68 108.15 108.15 (66.49) 244.60 (66.49) 244.60 ------281.51 281.51 EOPPL EOPPL 260.13 631.09 260.13 652.27 652.27 631.09 ------MPPL MPPL 2,175.79 5,152.62 2,175.79 5,152.62 4,872.58 2,042.98 2,042.98 4,872.58 ------REIT REIT
Total Others Hospitality Segment Total Income Net Operating results) (segment Segment Office Commercial Others Hospitality Segment Notes theto Condensed Consolidated Financial Statements 2019 30, September ended quarter the For Particulars Revenue: Segment Segment Office Commercial For the half year ended September 30, 2020 Particulars Revenue: Segment Segment Office Commercial Hospitality Segment Others Hospitality Segment Total Income Net Operating results) (segment Segment Office Commercial Others Total
Half-Yearly Report 2020-21 201 Total Total 721.18 38.95 66.45 775.91 535.21 638.18 845.07 660.62 8,415.01 8,912.17 8,212.60 9,257.37 9,408.89 9,300.69 10,557.08 10,892.14 ------741.99 661.38 741.99 661.38 IENMPL IENMPL 748.07 748.07 666.00 666.00 ------VCPPL VCPPL 553.19 million unless otherwise stated) otherwise unless million 553.19 720.37 623.28 623.28 720.37 654.95 654.95 - - - - QBPL QBPL 84.81 738.19 590.12 (79.33) (139.19) 510.79 733.82 587.60 448.41 262.96 996.78 823.00 (all amounts(all in ` ------382.51 QBPPL QBPPL 449.21 382.51 449.21 369.70 454.95 369.70 454.95 ------OBPL OBPL 545.52 508.77 545.52 689.48 508.77 689.80 689.48 689.80 ------ETPL ETPL 411.02 411.02 514.62 514.62 473.36 473.36 368.09 368.09 ------GSPL GSPL 331.54 331.54 329.99 448.47 329.99 422.00 448.47 422.00 ------EEPL EEPL 721.18 721.18 775.91 775.91 845.07 660.62 845.07 660.62 ------UPPL UPPL 178.14 178.14 145.78 145.78 375.22 375.22 450.40 450.40 ------EOPPL EOPPL 684.19 727.09 684.19 788.57 788.57 727.09 709.26 709.26 ------MPPL MPPL 4,017.72 4,487.16 4,017.72 4,487.16 4,207.56 4,307.65 4,207.56 4,307.65 ------Trust Trust
Total Total Others Others Hospitality Segment Hospitality Segment Total Income Net Operating results) (segment Segment Office Commercial Total Income Net Operating results) (segment Segment Office Commercial Others Others Hospitality Segment Hospitality Segment Notes theto Condensed Consolidated Financial Statements For the half year ended March 31, 2020 Particulars Revenue: Segment Segment Office Commercial For the half year ended September 30, 2019 Particulars Revenue: Segment Segment Office Commercial
202 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report Total 105.40 1,173.39 1,566.25 1,436.53 16,627.61 18,169.54 18,709.58 21,449.22 - - - - IENMPL 1,327.38 1,327.38 1,490.06 1,490.06 - - - - VCPPL million unless otherwise stated) otherwise unless million 1,176.47 1,375.32 1,176.47 1,375.32 - - QBPL 347.77 1,177.72 (218.52) 959.20 1,472.01 1,819.78 (all amounts(all in ` - - - - 752.21 752.21 QBPPL 904.16 904.16 - - - - OBPL 1,379.28 1,379.28 1,054.29 1,054.29 - - - - ETPL 841.45 841.45 925.64 925.64 - - - - GSPL 661.53 661.53 870.47 870.47 - - - - EEPL 1,566.25 1,436.53 1,566.25 1,436.53 - - - - UPPL 323.92 825.62 323.92 825.62 - - - - EOPPL 1,411.28 1,411.28 1,497.83 1,497.83 - - - - MPPL 8,794.81 8,794.81 8,225.28 8,225.28 ------REIT
Total Others Hospitality Segment Total Net Operating Income Income Net Operating results) (segment Segment Office Commercial Others Notes theto Condensed Consolidated Financial Statements For the year ended March 31, 2020 Particulars Revenue: Segment Segment Office Commercial Hospitality Segment
Half-Yearly Report 2020-21 203 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated) 49 RELATED PARTY DISCLOSURES I. List of related parties A. Parties to Embassy Office Parks REIT Embassy Property Developments Private Limited - Co-Sponsor BRE/ Mauritius Investments - Co-Sponsor Embassy Office Parks Management Services Private Limited - Manager Axis Trustee Services Limited - Trustee
The co-sponsor groups consist of the below entities Embassy Property Developments Private Limited - Co-Sponsor Embassy One Developers Private Limited D M Estates Private Limited Embassy Services Private Limited Golflinks Properties Private Limited
BRE/ Mauritius Investments - Co-Sponsor SG Indian Holding (NQ) Co. I Pte. Limited BREP VII SBS NTPL BREP Asia SBS Oxygen BREP Asia SG Indian Holding (NQ) Limited Holding (NQ) Limited Holding (NQ) Co II Pte. Limited SG Indian Holding (NQ) Co. II Pte. Limited BREP GML Holding (NQ) BREP VII SBS Oxygen BREP VII SG Indian Pte Limited Holding (NQ) Limited Holding (NQ) Co II Pte. Limited SG Indian Holding (NQ) Co. III Pte. Limited BREP VII GML Holding BREP Asia HCC Holding BREP Asia SBS Holding- (NQ) Pte Limited (NQ) Pte Limited NQ CO XI Limited BRE/Mauritius Investments II BREP Asia SBS GML BREP VII HCC Holding BREP VII SBS Holding- Holding (NQ) Limited (NQ) Pte Limited NQ CO XI Limited BREP NTPL Holding (NQ) Pte Limited BREP VII SBS GML BREP Asia SBS HCC Holding (NQ) Limited Holding (NQ) Limited BREP VII NTPL Holding (NQ) Pte Limited BREP Asia SG Oxygen BREP VII SBS HCC Holding (NQ) Pte Holding (NQ) Limited Limited BREP Asia SBS NTPL Holding (NQ) Limited BREP VII SG Oxygen India Alternate Property Holding (NQ) Pte Limited Limited
Directors & KMPs of the Manager (Embassy Office Parks Management Services Private Limited) Directors KMPs Jitendra Virwani Michael David Holland - CEO Tuhin Parikh Rajesh Kaimal - CFO (upto May 19, 2020) Vivek Mehra Aravind Maiya - CFO (from May 19, 2020) Ranjan Ramdas Pai Ramesh Periasamy - Compliance Officer and Company Secretary (Upto August 6, 2020) Anuj Puri Deepika Srivastava- Compliance Officer and Company Secretary (From August 7, 2020) Punita Kumar Sinha Robert Christopher Heady Aditya Virwani Asheesh Mohta (w.e.f: June 28, 2019, alternate to Robert Christopher Heady)
204 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
B. Joint Venture Golflink Software Parks Private Limited
C. Other related parties with whom the transactions have taken place during the period Vikas Telecom Private Limited Reddy Veeranna Constructions Private Limited (upto 21 March 2020) Dynasty Properties Private Limited Embassy Construction Private Limited Snap Offices Private Limited Mac Charles (India) Limited (formerly known as Stylus Commercial Services Private Limited) Lounge Hospitality LLP Synergy Property Development Services Private Limited (upto EPDPL Coliving Operation LLP November 5, 2019) Embassy Industrial Parks Private Limited EPDPL Coliving Private Limited Golflinks Embassy Management Services LLP Embassy Projects Private Limited Golflinks Park Management Services LLP Technique Control Facility Management Private Limited Wework India Management Private Limited Anarock Retail Advisors Private Limited Embassy Shelters Private Limited Manyata Builders Private Limited (upto 21 March 2020) Manyata Projects Private Limited (upto 21 March 2020) FIFC Condominium
Half-Yearly Report 2020-21 205 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
II. Related party transactions during the period/ year
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended September September March September March June September 30, 2020 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2019 Property Management fees Embassy Office Park Management 118.66 116.51 114.60 235.17 252.59 233.54 486.13 Services Private Limited
REIT Management fees Embassy Office Park Management 54.85 58.61 61.45 113.46 111.36 103.45 214.81 Services Private Limited
Purchase of Intangible assets Embassy Office Park Management - - - - 8.84 - 8.84 Services Private Limited
Purchase of Investment Property - Reddy Veeranna Constructions Private - - - - 4.51 - 4.51 Limited Anarock Retail Advisors Private Limited 8.00 - - 8.00 - - - Embassy Services Private Limited 6.72 - - 6.72 - - -
Common area maintenance Embassy Services Private Limited 110.95 130.93 179.27 241.88 247.47 313.96 591.22 Golflinks Embassy Business Park 3.09 6.39 6.03 9.48 12.05 12.06 24.11 Management Services LLP FIFC Condominium 17.15 17.12 16.85 34.27 33.56 33.45 67.01 Technique Control Facility Management 1.66 - - 1.66 - - - Private Limited
Repairs and maintenance- building FIFC Condominium - - - - 6.13 - 6.13
Business consultancy services (capitalised) Embassy Property Developments 13.86 12.69 42.74 26.55 51.41 73.49 124.90 Private Limited
Reimbursement of tenant improvements Wework India Management Private - 65.72 - 65.72 - - - Limited
Income from generation of renewable energy from the tenants of Vikas Telecom Private Limited 62.28 71.06 73.81 133.34 196.63 180.69 377.32 Embassy Property Developments - 6.72 32.60 6.72 32.88 54.67 87.55 Private Limited Dynasty Properties Private Limited - 1.79 12.25 1.79 17.28 22.04 39.32 Golflinks Software Park Private Limited 58.03 50.01 48.73 108.04 119.93 104.94 224.87
Security Deposit given/(repaid) to/ (by) related party Embassy Property Developments - - (165.36) - (165.35) (826.15) (991.50) Private Limited FIFC Condominium - - (2.52) - (2.52) (2.52) -
206 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended September September March September March June September 30, 2020 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2019 Security deposits received Wework India Management Private - 105.44 - 105.44 - - - Limited
Capital advances paid/ (received) Embassy Property Developments 137.00 68.34 272.36 205.34 4,612.61 272.36 4,884.97 Private Limited Reddy Veeranna Constructions Private - - 6.50 - (2.48) 6.50 4.02 Limited FIFC Condominium 2.79 - - 2.79 9.71 - 9.71
Rental and maintenance income Wework India Management Private 33.60 19.87 27.75 53.47 52.09 56.75 108.85 Limited Snap Offices Private Limited 9.16 9.27 9.20 18.43 18.44 18.41 36.85
Interest income Golflinks Software Park Private Limited 1.25 6.04 20.45 7.29 26.70 45.49 72.19 Embassy Property Developments 108.87 158.72 - 267.59 160.47 - 160.47 Private Limited Reddy Veeranna Construction Private - - - - - 1.53 1.53 Limited
Other operating income Embassy Property Developments 171.60 171.60 - 343.20 215.88 - 215.88 Private Limited Golflinks Software Park Private Limited 11.25 11.25 - 22.50 45.00 - 45.00
Project management consultancy fees (capitalised) Synergy Property Development - - 17.27 - 33.44 58.09 91.53 Services Private limited
Amount paid for civil works (capitalised) Synergy Property Development - - 89.00 - - 539.28 539.28 Services Private limited
Power and fuel expenses Embassy Services Private Limited 19.94 10.42 19.79 30.36 54.06 63.45 117.51
Reversal of impairment on investments Manyata Projects Private Limited - - - - (156.98) - (156.98)
Investments written off Manyata Projects Private Limited - - - - 156.98 - 156.98
Legal and professional charges Embassy Services Private Limited 4.67 5.90 1.19 10.57 44.25 4.19 18.65
Security charges Embassy Services Private Limited 4.78 4.78 3.30 9.56 8.64 4.30 12.94
Trademark and license fees Embassy Shelters Private Limited 0.36 0.35 0.36 0.71 0.71 0.71 1.42
Half-Yearly Report 2020-21 207 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
For the For the For the For the half For the half For the half For the year quarter quarter quarter year ended year ended year ended ended Particulars ended ended ended September September March September March June September 30, 2020 30, 2020 31, 2020 30, 2019 31, 2020 30, 2020 30, 2019 Purchase of consumables Embassy One Developers Private - - - - 16.81 - 16.81 Limited
Rates and taxes Embassy One Developers Private - - - - 2.06 - 2.06 Limited
Revenue - Room rentals, sale of food and beverages Jitendra Virwani 0.82 0.01 0.12 0.83 2.22 0.12 2.34 Embassy Property Developments 0.02 - 0.92 0.02 3.21 2.04 5.25 Private Limited Embassy One Developers Private - - - - 1.96 - 1.96 Limited Vikas Telecom Private Limited - - 0.16 - 0.15 0.16 0.31 JV Holding Private Limited - - - - 0.04 - 0.04 Others 0.02 0.05 0.89 0.07 4.04 0.95 4.99
Investment in debentures Golflinks Software Parks Private - - - - - 2,500.00 2,500.00 Limited
Redemption of investment in debentures Golflinks Software Parks Private 256.48 467.90 439.10 724.38 906.61 869.01 1,775.62 Limited
Secondment fees Embassy Office Parks Management 0.36 0.35 0.36 0.71 0.71 0.71 1.42 Services Private Limited
Trustee fees Axis Trustee Services Limited 0.74 0.74 0.74 1.48 1.48 1.48 2.96
Miscellaneous expenses Mac Charles (India) Limited - - 0.48 - - 0.48 0.48
Business Promotion expenses Lounge Hospitality LLP - - - - 0.06 - 0.06
Reimbursement of expenses (received)/ paid Embassy Services Private Limited 0.63 0.34 19.33 0.97 10.44 19.33 29.77 Embassy One Developers Private 0.37 (1.29) - (0.92) (6.26) - (6.26) Limited Embassy Office Parks Management (0.39) 1.09 47.70 0.70 6.17 47.70 53.87 Services Private Limited
Travel Expenses Embassy Services Private Limited 0.26 0.22 - 0.48 - - 0.02
Initial refundable receipt from Co- sponsor - received / (repaid) Embassy Property Development Private - - - - - (0.50) (0.50) Limited
208 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
III. Related party balances As at As at Particulars September 30, 2020 March 31, 2020 Security deposits Embassy Services Private Limited 60.50 60.50 Embassy One Developers Private Limited 1.23 1.23
Advance from customers Wework India Management Private Limited - 1.92
Trade payables Embassy Services Private Limited 83.49 91.74 Embassy Office Parks Management Service Private Limited - 4.66 Golflinks Embassy Business Park Management services LLP 13.04 2.01 FIFC Condominium 3.23 17.53
Unbilled revenue Vikas Telecom Private Limited 22.83 25.05 Embassy Property Developments Private Limited - 8.92 Dynasty Properties Private Limited - 3.73 Golflinks Software Parks Private Limited 21.16 24.12
Other current financial assets - other receivables from related party Manyata Builders Private Limited - 5.63 Embassy One Developers Private Limited 1.97 2.31 FIFC Condominium 0.65 -
Other current financial liabilities Embassy One Developers Private Limited - 0.05 Embassy Services Private Limited 94.16 115.48 Embassy Office Parks Management Services Private Limited 54.14 56.14 Axis Trustee Services Limited 1.47 - FIFC Condominium 0.50 0.95
Other current financial liabilities - Security deposit Vikas Telecom Private Limited 105.00 105.00 Golflinks Software Parks Private Limited 80.00 80.00
Current liabilities - capital creditors Embassy Property Developments Private Limited 15.90 14.73 Anarock Retail Advisors Private Limited 4.42 -
Other non-current assets - capital advance Embassy Shelters Private Limited 206.34 206.34 Reddy Veeranna Constructions Private Limited - 6.51 FIFC Condominium 12.50 9.71 Babbler Marketing Pvt Ltd 32.85 -
Other non-current assets - Prepayments FIFC Condominium - 5.64
Half-Yearly Report 2020-21 209 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
As at As at Particulars September 30, 2020 March 31, 2020 Other current assets - Advance for supply of goods and rendering of services FIFC Condominium 2.79 2.78 Other non-current assets - advance paid for co-development of property, including development rights on land Embassy Property Developments Private Limited (refer note 52) 14,203.60 13,998.26
Trade receivables Embassy Property Developments Private Limited - 51.48 Embassy One Developers Private Limited 1.20 1.20 Golflinks Embassy Business Park Management Services LLP 1.88 1.86 Wework India Management Private Limited 17.47 0.17 Vikas Telecom Private Limited 12.91 - Others 1.08 2.32
Lease deposits Wework India Management Private Limited 112.64 7.20 Snap Offices Private Limited 4.82 4.82
Investment in Debentures Golflinks Software Parks Private Limited - 724.38
50 DETAILS OF UTILISATION OF PROCEEDS OF ISSUE OF EMBASSY REIT SERIES II NCD 2020, TRANCHE A ARE AS FOLLOWS: Actual Unutilised utilisation amount Proposed Objects of the issue as per the prospectus upto as at utilisation September September 30, 2020 30, 2020 Granting shareholder debt including refinance of existing debt, 7,251.81 7,251.81 - construction and development at underlying SPV’s General purposes including issue expenses 248.19 85.20 162.99 Total 7,500.00 7,337.01 162.99
51 DISTRIBUTIONS 52 ADVANCE PAID FOR CO-DEVELOPMENT The Board of Directors of the Manager to the OF PROPERTY, INCLUDING DEVELOPMENT Trust, in their meeting held on November 2, 2020, RIGHTS OF LAND (M3 BLOCK A & B) have declared distribution to Unitholders of `5.50 Manyata Promoters Private Limited (‘MPPL’) per unit which aggregates to `4,244.16 million and Embassy Property Developments Private for the quarter ended September 30, 2020. The Limited (‘EPDPL’) entered into a co-development distributions of `5.50 per unit comprises `1.90 per agreement on 8 March 2017 whereby EPDPL shall unit in the form of interest payment, `0.42 per unit develop 1 msf M3 Block A bare shell building within in the form of dividend and the balance `3.18 per Embassy Manyata campus and shall hand over to unit in the form of amortization of SPV debt. MPPL by agreed delivery date for a consideration of `6,510 million to EPDPL, of which `6,434.46 Along with distribution of `4,498.81 million/ `5.83 million has already been paid as of September per unit for the quarter ended June 30, 2020, the 30, 2020 (`5,600 million was paid as of March 31, cumulative distribution for the half-year ended 2019, `629 million was paid during financial year September 30, 2020 aggregates to `8,742.97 2019-20 and balance `205 million was paid during million/ `11.33 per unit. the period ended September 30, 2020). Further, MPPL has appointed EPDPL as the development manager, to convert the bare shell buildings to
210 Embassy Office Parks REIT / Where the world comes to work Corporate Statutory Financial Summary valuation Corporate overview governance disclosures statements report
Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated)
warm shell for a development management fee of already been paid as of September 30, 2020 and `40 million to EPDPL along with an estimated cost balance is to be disbursed linked to achievement of such conversion from bare shell to warm shell of development milestones. Furthermore, as per of `1,706 million, of which `40 million towards the co-development agreement, during the period development management fees has already of construction, EPDPL is obligated to pay interest been paid as of September 30, 2020 and no to MPPL on the amount of the Development amounts have been paid towards the warm shell Consideration disbursed by MPPL to EPDPL. conversion. In summary, EPDPL shall develop 1 During the quarter ended September 30, 2020, msf M3 Block A warm shell building to be handed the parties have mutually agreed that, EPDPL shall over to MPPL by agreed delivery date for a total deposit two quarters of compensation/interest consideration of `8,256 million, of which `6,474.46 with MPPL in a Reserve account prior to December million has already been paid as of September 31, 2020. 30, 2020 and balance is to be disbursed linked to achievement of development milestones. EPDPL As per terms of both of these co-development is obligated to obtain Occupancy Certificate (OC) agreements, consideration is contingent on pre- for the buildings by December 2019. In case of defined leasing timelines and Net Operating any delay in obtaining the OC beyond the agreed Income achieved. delivery date, EPDPL is obligated to pay a rental compensation of `57 million per month of delay 53 THE BOARD OF DIRECTORS OF THE to MPPL. As of date, the bare shell building is MANAGER IN THEIR MEETING HELD ON still being constructed and the estimated date of MAY 19, 2020 APPROVED THE COMPOSITE completion and obtaining occupancy certificate is SCHEME OF ARRANGEMENT (THE now December 2022. During the half year ended “SCHEME”) INVOLVING MPPL, EOPPL AND September 30, 2020, MPPL has received from EPTPL. THE SCHEME PROVIDES FOR: EPDPL the agreed compensation of `57 million a) The demerger, transfer and vesting of the per month as mentioned above. Techzone business of EOPPL comprising Embassy TechZone Business Park (more The carrying cost in the consolidated financial specifically defined as the ‘TechZone statements of the above advance is `9,947.60 Undertaking’ in the Scheme) into EPTPL on million as at September 30, 2020 which includes a going concern basis, in consideration for one-time fair valuation gain on purchase price which the Embassy Office Parks REIT (as allocation on acquisition by the REIT. shareholder of EOPPL) will be issued shares in EPTPL; followed by During the year ended March 31, 2020, to further consolidate the M3 land parcel within Embassy b) Amalgamation of EOPPL into MPPL, on a Manyata campus, MPPL and EPDPL entered into going concern basis. another co-development agreement whereby EPDPL shall develop 0.6 msf M3 Block B bare Upon the scheme becoming effective, MPPL will shell building to be handed over to MPPL by become a 100% Holdco of the Embassy Office agreed delivery date of March 31, 2022 for a Parks REIT, holding Embassy Manyata Business total consideration of `6,767 million to EPDPL, of Park, 80% of the share capital of EEPL, 50% of the which `4,256 million has already been paid as of share capital of GLSP, while EPTPL will become a September 30, 2020 and balance is to be disbursed 100% directly-held SPV of Embassy Office Parks linked to achievement of development milestones. REIT, holding Embassy TechZone, an existing Further, MPPL has also appointed EPDPL as the asset of the Embassy Office Parks REIT. This development manager to obtain Occupancy would result in simplification of group structure Certificate (OC) for the buildings by September and holding of MPPL in a single tier structure. 2023. MPPL is obligated to pay a development management fees of `20 million and an estimated The Scheme is subject to receipt of necessary cost of conversion of `580 million to EPDPL of statutory and regulatory approvals under which no amounts have been paid as of date. In applicable laws, including the approval of National summary, EPDPL shall develop 0.6 msf M3 Block Company Law Tribunal (NCLT), Mumbai bench. B warm shell building to be handed over to MPPL The Scheme has been filed with NCLT on June 20, by agreed delivery date for a total consideration 2020 and is pending its approval as of date. of `7,367 million, of which `4,256 million has
Half-Yearly Report 2020-21 211 Notes to the Condensed Consolidated Financial Statements
(all amounts in ` million unless otherwise stated) 54 SUBSEQUENT EVENTS: On October 22, 2020, the Board of Directors of the Manager approved acquisition of the property maintenance business of Embassy Manyata and Embassy TechZone, from Embassy Services Private Limited (‘ESPL’) for a total consideration of `4,740 million, pursuant to Business Transfer Agreements entered into in this regard by MPPL and EOPPL respectively. The consideration for the aforesaid acquisition, is paid in the form of issuance of unlisted, unsecured, redeemable non-convertible debentures of MPPL and EOPPL to ESPL and assumption and repayment of identified liabilities of ESPL and the acquisition has been completed on October 28, 2020.
55 The figures for the half year ended March 31, 2020 are the derived figures between the audited figures in respect of the year ended March 31, 2020 and the published year-to-date figures upto ended September 30, 2019, which were subject to limited review.
for S R Batliboi & Associates LLP for and on behalf of the Board of Directors of Chartered Accountants Embassy Office Parks Management Services Private Limited ICAI firm's registration number: 101049W/E300004 (as Manager to the Embassy Office Parks REIT)
Sd/- Sd/- Sd/- Adarsh Ranka Jitendra Virwani Tuhin Parikh Partner Director Director Membership number: 209567 DIN: 00027674 DIN: 00544890 Place: Bengaluru Place: Bengaluru Place: Mumbai Date: November 2, 2020 Date: November 2, 2020 Date: November 2, 2020
212 Embassy Office Parks REIT / Where the world comes to work SUMMARY VALUATION REPORT
Embassy Office Parks Management Services Private Limited in its capacity as manager of The Embassy Office Parks REIT
EMBASSY MANYATA, BENGALURU EXPRESS TOWERS, MUMBAI EMBASSY 247, MUMBAI FIRST INTERNATIONAL FINANCE CENTRE (FIFC), MUMBAI EMBASSY TECHZONE, PUNE EMBASSY QUADRON, PUNE EMBASSY QUBIX, PUNE EMBASSY OXYGEN, NOIDA EMBASSY GALAXY, NOIDA EMBASSY GOLFLINKS, BENGALURU EMBASSY ONE, BENGALURU HILTON AT EMBASSY GOLFLNKS, BENGALURU EMBASSY ENERGY, BELLARY DISTRICT, KARNATAKA
DATE OF VALUATION: SEPTEMBER 30, 2020 DATE OF REPORT: OCTOBER 29, 2020
Value Assessment Valuer under SEBI (REIT) Service Regulations, 2014 EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
1 Instruction environmental site contamination or any failure to comply with environmental legislation which may affect the value of the properties. Further, the ‘Consultants’ shall not accept liability for any errors, iVAS Partners, represented by Mr. Manish Gupta, has been instructed by Embassy Office Parks misstatements, omissions in the Report caused due to false, misleading or incomplete information or Management Services Private Limited (the ‘Client’, the ‘Instructing Party’) in its capacity as manager of documentation provided to the ‘Consultants’ by the Instructing Party. The Embassy Office Parks REIT (Embassy REIT) to advice upon the Market Value (MV) of properties comprising of commercial office real estate assets located across Bengaluru, Pune, Mumbai and Noida as well ◼ The Consultants’ maximum aggregate liability for claims arising out of or in connection with the as affiliated facilities including a solar park, retail spaces and hotels (together herein referred as subject Valuation Report, under this contract shall not exceed Indian Rupees 30 mn. properties across the report). ◼ In the event that any of the Sponsor, Manager, Trustee, Embassy REIT in connection with the report CBRE has been instructed by the Client to be the ‘Value Assessment Service Provider’ for providing market be subject to any claim (“Claim Parties”) in connection with, arising out of or attributable to the intelligence to the ‘Valuer’ (iVAS Partners, represented by Mr. Manish Gupta) and forecasting cash flows Valuation Report, the Claim Parties will be entitled to require the ‘Consultants’ to be a necessary from the respective assets. The Valuer has utilized the market intelligence provided by CBRE and party/ respondent to such claim and the ‘Consultants’ shall not object to their inclusion as a necessary independently reviewed the cash flows to arrive at the Market Value of the respective assets as per the SEBI party/ respondent. If the ‘Consultants’ do not co-operate to be named as a necessary party/ (REIT) regulations 2014. iVAS Partners (represented by Mr. Manish Gupta) and CBRE are collectively respondent to such claims or co-operate in providing adequate/ successful defense in defending such referred to as the Consultants for the purpose of this report. claims, the Claim Parties jointly or severally will be entitled to initiate a separate claim against the ‘Consultants’ in this regard and the Consultants’ liability shall extend to the value of the claims, The details of the subject properties under the purview of this valuation exercise are tabulated below: losses, penalties, costs and liabilities incurred by the Claim Parties.
◼ Development Name Location The Consultants will neither be responsible for any legal due diligence, title search, zoning check, Embassy Manyata Bengaluru development permissions and physical measurements nor undertake any verification/ validation of Express Towers Mumbai the zoning regulations/ development controls etc. Embassy 247 Mumbai First International Finance Centre Mumbai 1.4 Capability of Valuer and Value Assessment Service Provider Embassy TechZone Pune Embassy Quadron Pune Valuer under SEBI (REIT) Regulations, 2014: iVAS Partners, represented by Mr. Manish Gupta Embassy Qubix Pune Manish Gupta, Partner at iVAS Partners, is a Registered Architect with Council of Architecture (COA) and a Embassy Oxygen Noida member of the Royal Institute of Charted Surveyors (MRICS) and Institution of Valuers (IOV), with over 12 Embassy Galaxy Noida Embassy GolfLinks Bengaluru years of experience in the real estate industry. Manish is a seasoned professional with experience in providing Embassy One Bengaluru real estate valuation services to a wide spectrum of clients including financial institutions, private equity Hilton at Embassy GolfLinks Bengaluru funds, developers, NBFCs, corporate houses, banks, resolution professionals, land owners, etc. Embassy Energy Bellary District, Karnataka He has worked on variety of valuation, consulting and technical due-diligence assignments for various purposes including investment related due diligence, mortgage/collateral appraisals, financial reporting, listing 1.1 Purpose purposes, IBC led requirements, etc. across a range of asset classes such as residential projects, integrated township developments, hospitality assets, commercial (office and retail) projects, industrial developments, The Valuer understands that the valuation is required by the Client for financial and investor reporting warehousing parks, educational projects, healthcare developments, etc. for both national as well as purposes to comply with the requirements of Regulation 21 of the SEBI (REIT) Regulations, 2014. international clients. Value Assessment Service Provider: CBRE South Asia Pvt. Ltd. 1.2 Reliant Party CBRE Advisory Services India is an integral part of CBRE Global Valuation & Advisory Services team. The Reliant parties to this report shall mean Embassy Office Parks Management Services Private Limited Global VAS team comprises of over 1,500 professionals across approximately 280 offices globally and India (EOPMSPL), the Embassy Office Parks REIT (“Embassy REIT”) and their Unit Holders and Axis Trustee Advisory Services team comprises of more than 280 professionals. Services Limited (the Trustee for the Embassy REIT) for the purpose (of the valuation) as highlighted in this report. The auditors would be extended reliance by the ‘Consultants’ but would extend no liability to the CBRE Advisory Services India have completed over 80,000 valuation and advisory assignments across varied auditors. asset classes spread across 20 states and 300+ cities. CBRE provides quality valuation, risk advisory and consulting services across a range of property types including residential, hospitality, retail, commercial, institutional, Special Economic Zone (SEZ), industrial, etc. CBRE derives global best practices while The valuation will be prepared strictly and only for the use of the Reliant Party and for the Purpose maintaining the complexities of Indian real estate markets and are ideally positioned to help solve any specifically stated. The instructing party would make all reliant parties aware of the terms and conditions of valuation related real estate challenge, ranging from single asset valuations to valuation of multi-market and this agreement under which this exercise is being undertaken and take due acknowledgements to the same multi-property portfolios. effect. Our dedicated and experienced professionals provide quality services from 9 offices across India (Delhi, Mumbai, Bengaluru, Chennai, Kolkata, Gurgaon, Hyderabad, Pune and Ahmedabad). Our professionals have 1.3 Limitation of Liability a varied qualification base such as Royal Institute of Chartered Surveyors (RICS) or IOV, IIV certified ◼ The ‘Consultants’ provide the Services exercising due care and skill, but the ‘Consultants’ do not valuation professional, master planner, architect, MBA, CA, CFA, etc. and this entire multi-faceted experience accept any legal liability arising from negligence or otherwise to any person in relation to possible helps us in achieving our commitment to provide the highest level of professional expertise to our clients.
CBRE Advisory Services India team has substantial experience with several institutional clients including financial institutions, real estate funds, private equity funds, developers, corporates, banks, NBFCs, etc.
214 SUMMARY VALUATION REPORT EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
1 Instruction environmental site contamination or any failure to comply with environmental legislation which may affect the value of the properties. Further, the ‘Consultants’ shall not accept liability for any errors, iVAS Partners, represented by Mr. Manish Gupta, has been instructed by Embassy Office Parks misstatements, omissions in the Report caused due to false, misleading or incomplete information or Management Services Private Limited (the ‘Client’, the ‘Instructing Party’) in its capacity as manager of documentation provided to the ‘Consultants’ by the Instructing Party. The Embassy Office Parks REIT (Embassy REIT) to advice upon the Market Value (MV) of properties comprising of commercial office real estate assets located across Bengaluru, Pune, Mumbai and Noida as well ◼ The Consultants’ maximum aggregate liability for claims arising out of or in connection with the as affiliated facilities including a solar park, retail spaces and hotels (together herein referred as subject Valuation Report, under this contract shall not exceed Indian Rupees 30 mn. properties across the report). ◼ In the event that any of the Sponsor, Manager, Trustee, Embassy REIT in connection with the report CBRE has been instructed by the Client to be the ‘Value Assessment Service Provider’ for providing market be subject to any claim (“Claim Parties”) in connection with, arising out of or attributable to the intelligence to the ‘Valuer’ (iVAS Partners, represented by Mr. Manish Gupta) and forecasting cash flows Valuation Report, the Claim Parties will be entitled to require the ‘Consultants’ to be a necessary from the respective assets. The Valuer has utilized the market intelligence provided by CBRE and party/ respondent to such claim and the ‘Consultants’ shall not object to their inclusion as a necessary independently reviewed the cash flows to arrive at the Market Value of the respective assets as per the SEBI party/ respondent. If the ‘Consultants’ do not co-operate to be named as a necessary party/ (REIT) regulations 2014. iVAS Partners (represented by Mr. Manish Gupta) and CBRE are collectively respondent to such claims or co-operate in providing adequate/ successful defense in defending such referred to as the Consultants for the purpose of this report. claims, the Claim Parties jointly or severally will be entitled to initiate a separate claim against the ‘Consultants’ in this regard and the Consultants’ liability shall extend to the value of the claims, The details of the subject properties under the purview of this valuation exercise are tabulated below: losses, penalties, costs and liabilities incurred by the Claim Parties.
◼ Development Name Location The Consultants will neither be responsible for any legal due diligence, title search, zoning check, Embassy Manyata Bengaluru development permissions and physical measurements nor undertake any verification/ validation of Express Towers Mumbai the zoning regulations/ development controls etc. Embassy 247 Mumbai First International Finance Centre Mumbai 1.4 Capability of Valuer and Value Assessment Service Provider Embassy TechZone Pune Embassy Quadron Pune Valuer under SEBI (REIT) Regulations, 2014: iVAS Partners, represented by Mr. Manish Gupta Embassy Qubix Pune Manish Gupta, Partner at iVAS Partners, is a Registered Architect with Council of Architecture (COA) and a Embassy Oxygen Noida member of the Royal Institute of Charted Surveyors (MRICS) and Institution of Valuers (IOV), with over 12 Embassy Galaxy Noida Embassy GolfLinks Bengaluru years of experience in the real estate industry. Manish is a seasoned professional with experience in providing Embassy One Bengaluru real estate valuation services to a wide spectrum of clients including financial institutions, private equity Hilton at Embassy GolfLinks Bengaluru funds, developers, NBFCs, corporate houses, banks, resolution professionals, land owners, etc. Embassy Energy Bellary District, Karnataka He has worked on variety of valuation, consulting and technical due-diligence assignments for various purposes including investment related due diligence, mortgage/collateral appraisals, financial reporting, listing 1.1 Purpose purposes, IBC led requirements, etc. across a range of asset classes such as residential projects, integrated township developments, hospitality assets, commercial (office and retail) projects, industrial developments, The Valuer understands that the valuation is required by the Client for financial and investor reporting warehousing parks, educational projects, healthcare developments, etc. for both national as well as purposes to comply with the requirements of Regulation 21 of the SEBI (REIT) Regulations, 2014. international clients. Value Assessment Service Provider: CBRE South Asia Pvt. Ltd. 1.2 Reliant Party CBRE Advisory Services India is an integral part of CBRE Global Valuation & Advisory Services team. The Reliant parties to this report shall mean Embassy Office Parks Management Services Private Limited Global VAS team comprises of over 1,500 professionals across approximately 280 offices globally and India (EOPMSPL), the Embassy Office Parks REIT (“Embassy REIT”) and their Unit Holders and Axis Trustee Advisory Services team comprises of more than 280 professionals. Services Limited (the Trustee for the Embassy REIT) for the purpose (of the valuation) as highlighted in this report. The auditors would be extended reliance by the ‘Consultants’ but would extend no liability to the CBRE Advisory Services India have completed over 80,000 valuation and advisory assignments across varied auditors. asset classes spread across 20 states and 300+ cities. CBRE provides quality valuation, risk advisory and consulting services across a range of property types including residential, hospitality, retail, commercial, institutional, Special Economic Zone (SEZ), industrial, etc. CBRE derives global best practices while The valuation will be prepared strictly and only for the use of the Reliant Party and for the Purpose maintaining the complexities of Indian real estate markets and are ideally positioned to help solve any specifically stated. The instructing party would make all reliant parties aware of the terms and conditions of valuation related real estate challenge, ranging from single asset valuations to valuation of multi-market and this agreement under which this exercise is being undertaken and take due acknowledgements to the same multi-property portfolios. effect. Our dedicated and experienced professionals provide quality services from 9 offices across India (Delhi, Mumbai, Bengaluru, Chennai, Kolkata, Gurgaon, Hyderabad, Pune and Ahmedabad). Our professionals have 1.3 Limitation of Liability a varied qualification base such as Royal Institute of Chartered Surveyors (RICS) or IOV, IIV certified ◼ The ‘Consultants’ provide the Services exercising due care and skill, but the ‘Consultants’ do not valuation professional, master planner, architect, MBA, CA, CFA, etc. and this entire multi-faceted experience accept any legal liability arising from negligence or otherwise to any person in relation to possible helps us in achieving our commitment to provide the highest level of professional expertise to our clients.
CBRE Advisory Services India team has substantial experience with several institutional clients including financial institutions, real estate funds, private equity funds, developers, corporates, banks, NBFCs, etc.
SUMMARY VALUATION REPORT 215 EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
1.5 Disclosures 1.6 Assumptions, Disclaimers, Limitations & Qualifications to Valuation
The Consultants hereby certify that: Valuation • The subject valuation exercise is based on prevailing market dynamics as on the date of valuation and does not ◼ iVAS Partners (Valuer Registration Number: IBBI/RV-E/02/2020/112), represented by Mr. Manish Subject take into account any unforeseeable developments which could impact the same in the future Gupta (hereinafter referred to as the Valuer), is eligible to be appointed as a valuer in terms of to Change: Regulation 2(1)(zz) of the Securities and Exchange Board of India (Real Estate Investment Trusts) Our • The Consultants are not engaged to carry out all possible investigations in relation to the subject properties. Regulations, 2014 Investigations: Where in our report the Consultants identify certain limitations to our investigations, this is to enable the reliant party to instruct further investigations where considered appropriate or where the Consultants recommend as ◼ Neither CBRE nor iVAS Partners (represented by Mr. Manish Gupta - Partner, iVAS Partners) are an necessary prior to reliance. The Consultants are not liable for any loss occasioned by a decision not to conduct associate of the instructing party further investigations ◼ Mr. Manish Gupta, Partner, iVAS Partners (the Valuer) has a minimum of five years of experience in Assumptions: • Assumptions are a necessary part of undertaking valuations. The Valuer adopts assumptions for the purpose of the valuation of real estate providing valuation advice because some matters are not capable of accurate calculation or fall outside the scope of our expertise, or our instructions. The reliant parties accept that the valuation contains certain specific ◼ The Valuer has not been involved with the acquisition or disposal within the last twelve months of any assumptions and acknowledges and accepts the risk that if any of the assumptions adopted in the valuation are of the properties valued under this summary valuation report in the last twelve months incorrect, then this may have an effect on the valuation ◼ The Valuer has adequate and robust internal controls to ensure the integrity of the valuation reports Information • The valuations are based on the information provided by the Instructing Party (Embassy Office Parks Supplied by Management Services Private Limited). The same has been assumed to be correct and has been used for ◼ The Valuer has sufficient key personnel with adequate experience and qualification to perform Others: valuation exercise. Where it is stated in the report that another party has supplied information to the services related to property valuation at all times ‘Consultants’, this information is believed to be reliable but the ‘Consultants’ can accept no responsibility if ◼ The Valuer has sufficient financial resources to enable them to conduct their business effectively and this should prove not to be so. However, please note that wherever we have relied on information from external meet their liabilities sources, reasonable care has been taken to ensure that such data has been correctly extracted from those sources and /or reproduced in its proper form and context ◼ The Valuer has acquainted itself with all laws or regulations relevant to such valuation Future Matters: • To the extent that the valuation includes any statement as to a future matter, that statement is provided as an ◼ The valuation of assets undertaken is impartial, true and fair and in accordance with the Securities and estimate and/or opinion based on the information known to the ‘Consultants’ at the date of this document. The Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014 ‘Consultants’ do not warrant that such statements are accurate or correct Map and Plans: • Any sketch, plan or map in this report is included to assist reader while visualizing the properties and assume ◼ The Valuer and any of its employees/ consultants involved in valuation of the REIT assets are not no responsibility in connection with such matters invested in units of the REIT or in the assets being valued till the time such person is designated as Site Details: • Based on title due-diligence information provided by the Client, the Valuer understands that the subject valuer of such REIT and not less than 6 months after ceasing to be valuer of the REIT properties are free from any encroachments and are available as on the date of the valuation ◼ The Valuer has conducted the valuation of the REIT assets with transparency and fairness and shall Property Title: • For the purpose of this valuation exercise, the Valuer has relied on the Title Reports prepared by the Legal render, at all times, high standards of service, exercise due diligence, ensure proper care and exercise Counsels for each of the properties and has made no further enquiries with the relevant local authorities in this professional judgement regard. The Valuer understands that the subject properties may have encumbrances, disputes and claims. The Valuer does not have the expertise or the preview to verify the veracity or quantify these encumbrances, ◼ The Valuer has acted with independence, objectivity and impartiality in performing the valuation disputes or claims. For the purpose of this valuation, the Valuer has assumed that the respective assets have title ◼ The Valuer has discharged its duties towards the Embassy REIT in an efficient and competent manner, deeds that are clear and marketable. utilizing its knowledge, skills and experience in best possible way to complete the said assignment Environmental • The Valuer has assumed that the subject properties are not contaminated and are not adversely affected by any Conditions: existing or proposed environmental law and any processes which are carried out on the properties are regulated ◼ The Valuer shall not accept remuneration, in any form, for performing a valuation of the REIT assets by environmental legislation and are properly licensed by the appropriate authorities from any person other than the Embassy REIT or its authorised representatives. Town Planning: • The current zoning of the subject properties has been adopted on the basis of review of various documents (title ◼ The Valuer shall before accepting any assignment from any related party to the Embassy REIT, shall deeds) provided by the Instructing Party and the current land use maps for the subject region. The same has disclose to the Embassy REIT, any direct or indirect consideration which the valuer may have in been considered for the purpose of this valuation exercise. Further, it has been assumed that the development on respect of such assignment the subject properties adheres/ would adhere to the development regulations as prescribed by the relevant authorities. The Valuer has not made any enquiries with the relevant development authorities to validate the ◼ The Valuer shall disclose to the trustee of the Embassy REIT, any pending business transactions, legality of the same. contracts under negotiation and other arrangements with the Instructing Party or any other party whom Area: • Various areas related to the properties considered for the purpose of this valuation exercise are based on the rent the Embassy REIT is contracting with and any other factors which may interfere with the Valuer’s rolls/ Architect certificate provided by the Instructing Party. It must be noted that the above information has ability to give an independent and professional valuation of the property been provided by the Client and has been verified based on the approvals/ layout plans/building plans provided by the Client. However, the Valuer has not undertaken additional verification and physical measurement for the ◼ The Valuer shall not make false, misleading or exaggerated claims in order to secure assignments purpose of this valuation exercise ◼ The Valuer shall not provide misleading valuation, either by providing incorrect information or by withholding relevant information ◼ The Valuer shall not accept an assignment that includes reporting of the outcome based on predetermined opinions and conclusions required by the Embassy REIT ◼ The valuation undertaken by the Valuer abides by international valuation standards
◼ The Valuer notes that there are encumbrances, however, no options or pre-emptions rights in relation to the assets based on the title report prepared by King & Partridge, Shardul Amarchand Mangaldas & Co, Cyril Amarchand Mangaldas, Little & Company, Jayashree Sridhar and Law Shield (hereinafter collectively referred to as ‘Legal Counsels’)
216 SUMMARY VALUATION REPORT EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
1.5 Disclosures 1.6 Assumptions, Disclaimers, Limitations & Qualifications to Valuation
The Consultants hereby certify that: Valuation • The subject valuation exercise is based on prevailing market dynamics as on the date of valuation and does not ◼ iVAS Partners (Valuer Registration Number: IBBI/RV-E/02/2020/112), represented by Mr. Manish Subject take into account any unforeseeable developments which could impact the same in the future Gupta (hereinafter referred to as the Valuer), is eligible to be appointed as a valuer in terms of to Change: Regulation 2(1)(zz) of the Securities and Exchange Board of India (Real Estate Investment Trusts) Our • The Consultants are not engaged to carry out all possible investigations in relation to the subject properties. Regulations, 2014 Investigations: Where in our report the Consultants identify certain limitations to our investigations, this is to enable the reliant party to instruct further investigations where considered appropriate or where the Consultants recommend as ◼ Neither CBRE nor iVAS Partners (represented by Mr. Manish Gupta - Partner, iVAS Partners) are an necessary prior to reliance. The Consultants are not liable for any loss occasioned by a decision not to conduct associate of the instructing party further investigations ◼ Mr. Manish Gupta, Partner, iVAS Partners (the Valuer) has a minimum of five years of experience in Assumptions: • Assumptions are a necessary part of undertaking valuations. The Valuer adopts assumptions for the purpose of the valuation of real estate providing valuation advice because some matters are not capable of accurate calculation or fall outside the scope of our expertise, or our instructions. The reliant parties accept that the valuation contains certain specific ◼ The Valuer has not been involved with the acquisition or disposal within the last twelve months of any assumptions and acknowledges and accepts the risk that if any of the assumptions adopted in the valuation are of the properties valued under this summary valuation report in the last twelve months incorrect, then this may have an effect on the valuation ◼ The Valuer has adequate and robust internal controls to ensure the integrity of the valuation reports Information • The valuations are based on the information provided by the Instructing Party (Embassy Office Parks Supplied by Management Services Private Limited). The same has been assumed to be correct and has been used for ◼ The Valuer has sufficient key personnel with adequate experience and qualification to perform Others: valuation exercise. Where it is stated in the report that another party has supplied information to the services related to property valuation at all times ‘Consultants’, this information is believed to be reliable but the ‘Consultants’ can accept no responsibility if ◼ The Valuer has sufficient financial resources to enable them to conduct their business effectively and this should prove not to be so. However, please note that wherever we have relied on information from external meet their liabilities sources, reasonable care has been taken to ensure that such data has been correctly extracted from those sources and /or reproduced in its proper form and context ◼ The Valuer has acquainted itself with all laws or regulations relevant to such valuation Future Matters: • To the extent that the valuation includes any statement as to a future matter, that statement is provided as an ◼ The valuation of assets undertaken is impartial, true and fair and in accordance with the Securities and estimate and/or opinion based on the information known to the ‘Consultants’ at the date of this document. The Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014 ‘Consultants’ do not warrant that such statements are accurate or correct Map and Plans: • Any sketch, plan or map in this report is included to assist reader while visualizing the properties and assume ◼ The Valuer and any of its employees/ consultants involved in valuation of the REIT assets are not no responsibility in connection with such matters invested in units of the REIT or in the assets being valued till the time such person is designated as Site Details: • Based on title due-diligence information provided by the Client, the Valuer understands that the subject valuer of such REIT and not less than 6 months after ceasing to be valuer of the REIT properties are free from any encroachments and are available as on the date of the valuation ◼ The Valuer has conducted the valuation of the REIT assets with transparency and fairness and shall Property Title: • For the purpose of this valuation exercise, the Valuer has relied on the Title Reports prepared by the Legal render, at all times, high standards of service, exercise due diligence, ensure proper care and exercise Counsels for each of the properties and has made no further enquiries with the relevant local authorities in this professional judgement regard. The Valuer understands that the subject properties may have encumbrances, disputes and claims. The Valuer does not have the expertise or the preview to verify the veracity or quantify these encumbrances, ◼ The Valuer has acted with independence, objectivity and impartiality in performing the valuation disputes or claims. For the purpose of this valuation, the Valuer has assumed that the respective assets have title ◼ The Valuer has discharged its duties towards the Embassy REIT in an efficient and competent manner, deeds that are clear and marketable. utilizing its knowledge, skills and experience in best possible way to complete the said assignment Environmental • The Valuer has assumed that the subject properties are not contaminated and are not adversely affected by any Conditions: existing or proposed environmental law and any processes which are carried out on the properties are regulated ◼ The Valuer shall not accept remuneration, in any form, for performing a valuation of the REIT assets by environmental legislation and are properly licensed by the appropriate authorities from any person other than the Embassy REIT or its authorised representatives. Town Planning: • The current zoning of the subject properties has been adopted on the basis of review of various documents (title ◼ The Valuer shall before accepting any assignment from any related party to the Embassy REIT, shall deeds) provided by the Instructing Party and the current land use maps for the subject region. The same has disclose to the Embassy REIT, any direct or indirect consideration which the valuer may have in been considered for the purpose of this valuation exercise. Further, it has been assumed that the development on respect of such assignment the subject properties adheres/ would adhere to the development regulations as prescribed by the relevant authorities. The Valuer has not made any enquiries with the relevant development authorities to validate the ◼ The Valuer shall disclose to the trustee of the Embassy REIT, any pending business transactions, legality of the same. contracts under negotiation and other arrangements with the Instructing Party or any other party whom Area: • Various areas related to the properties considered for the purpose of this valuation exercise are based on the rent the Embassy REIT is contracting with and any other factors which may interfere with the Valuer’s rolls/ Architect certificate provided by the Instructing Party. It must be noted that the above information has ability to give an independent and professional valuation of the property been provided by the Client and has been verified based on the approvals/ layout plans/building plans provided by the Client. However, the Valuer has not undertaken additional verification and physical measurement for the ◼ The Valuer shall not make false, misleading or exaggerated claims in order to secure assignments purpose of this valuation exercise ◼ The Valuer shall not provide misleading valuation, either by providing incorrect information or by withholding relevant information ◼ The Valuer shall not accept an assignment that includes reporting of the outcome based on predetermined opinions and conclusions required by the Embassy REIT ◼ The valuation undertaken by the Valuer abides by international valuation standards
◼ The Valuer notes that there are encumbrances, however, no options or pre-emptions rights in relation to the assets based on the title report prepared by King & Partridge, Shardul Amarchand Mangaldas & Co, Cyril Amarchand Mangaldas, Little & Company, Jayashree Sridhar and Law Shield (hereinafter collectively referred to as ‘Legal Counsels’)
SUMMARY VALUATION REPORT 217 EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
Condition & • In the absence of any information to the contrary, the Valuer has assumed that there are no abnormal ground Material • The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organisation as a “Global Repair: conditions, nor archaeological remains present which might adversely affect the current or future occupation, Valuation Pandemic” on the 11th March 2020, has impacted many aspects of daily life and the global economy – with development or value of the property; the property is free from rot, infestation, structural or latent defect; no Uncertainty some real estate markets experiencing significantly lower levels of transactional activity and liquidity. As at the currently known deleterious or hazardous materials or suspect techniques will be used in the construction of or from Novel valuation date, there is a shortage of market evidence for comparison purposes, to inform opinions of value. subsequent alterations or additions to the property and comments made in the property details do not purport to Coronavirus: express an opinion about, or advice upon, the condition of uninspected parts and should not be taken as making Our valuation of the properties is therefore reported as being subject to ‘material valuation uncertainty’. an implied representation or statement about such parts Consequently, less certainty – and a higher degree of caution – should be attached to our valuation than would Not a Structural • The Valuer states that this is a valuation report and not a structural survey normally be the case. Survey: Legal: • Unless specifically disclosed in the report, the Valuer has not made any allowances with respect to any existing For the avoidance of doubt, the inclusion of the ‘material valuation uncertainty’ declaration above does not or proposed local legislation relating to taxation on realization of the sale value of the subject property. mean that the valuation cannot be relied upon. Rather, the declaration has been included to ensure transparency Others: • Considering the unorganized nature of real estate markets in India, all comparable evidence (if any) provided in of the fact that – in the current extraordinary circumstances – less certainty can be attached to the valuation than the valuation report has been limited to the basic details such as the area of asset, rate at which transacted, broad would otherwise be the case. The material uncertainty clause is to serve as a precaution and does not invalidate location, etc. other specific details would be provided only if the information is available in public domain the valuation.
• The actual market price achieved may be higher or lower than our estimate of value depending upon the Values may change more rapidly and significantly than during standard market conditions. Given the unknown circumstances of the transaction, nature of the business, etc. The knowledge, negotiating ability and motivation future impact that COVID-19 might have on the real estate market and the difficulty in differentiating between of the buyers and sellers and the applicability of a discount or premium for control will also affect actual market short term impacts and long-term structural changes, we recommend that you keep the valuation contained price achieved. Accordingly, our valuation conclusion may not necessarily be the price at which actual within this report under frequent review transaction takes place Additional: • In the current uncertain environment caused by the outbreak of the Novel Coronavirus (COVID-19), we have • We have assumed that the business continues normally without any disruptions due to statutory or other considered / relooked at various asset/ market specific parameters and have adopted heuristic/ careful external/internal occurrences interventions (including but not limited to the points mentioned below) to our projected cashflows based on our Other • Please note that all the factual information such as tenants’ leasable area, lease details such as lease rent, lease view as of the date of valuation. Assumptions: commencement and lease end date, lock – in period, escalation terms, etc. pertaining to the subject properties is ▪ based on the appropriate relevant documents provided by the Client and the same has been adopted for the Limited/ no growth in rent and ARR has been considered over the next few quarters ▪ purpose of this valuation exercise. While we have reviewed a few lease deeds on a sample basis, the Construction timelines have been delayed from the earlier estimates ▪ Consultants do not take any responsibility towards authenticity of the rent rolls provided by the Client. Any Considering challenges in the short term, timelines have been extended for new space take-up/ future change in the above information will have an impact on the assessed value and in that case the Valuer will have leasing ▪ to relook at the assessed value. The relevant information sources are represented in section 2.5 For the operational hotels, occupancy has been rationalized in the short term” • All measurements, areas and ages quoted in our report are approximate • We are not advisors with respect to legal tax and regulatory matters for the transaction. No investigation of the respective Special Purpose Vehicles (SPVs) holding the assets’ claim to title of assets has been made for the purpose of this Report and the SPVs’ claim to such rights have been assumed to be valid. No consideration has been given to liens or encumbrances against the assets. Therefore, no responsibility is assumed for matters of a legal nature • Kindly note that we have undertaken a quarterly assessment of cash flows for the purpose of the valuations
218 SUMMARY VALUATION REPORT EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
Condition & • In the absence of any information to the contrary, the Valuer has assumed that there are no abnormal ground Material • The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organisation as a “Global Repair: conditions, nor archaeological remains present which might adversely affect the current or future occupation, Valuation Pandemic” on the 11th March 2020, has impacted many aspects of daily life and the global economy – with development or value of the property; the property is free from rot, infestation, structural or latent defect; no Uncertainty some real estate markets experiencing significantly lower levels of transactional activity and liquidity. As at the currently known deleterious or hazardous materials or suspect techniques will be used in the construction of or from Novel valuation date, there is a shortage of market evidence for comparison purposes, to inform opinions of value. subsequent alterations or additions to the property and comments made in the property details do not purport to Coronavirus: express an opinion about, or advice upon, the condition of uninspected parts and should not be taken as making Our valuation of the properties is therefore reported as being subject to ‘material valuation uncertainty’. an implied representation or statement about such parts Consequently, less certainty – and a higher degree of caution – should be attached to our valuation than would Not a Structural • The Valuer states that this is a valuation report and not a structural survey normally be the case. Survey: Legal: • Unless specifically disclosed in the report, the Valuer has not made any allowances with respect to any existing For the avoidance of doubt, the inclusion of the ‘material valuation uncertainty’ declaration above does not or proposed local legislation relating to taxation on realization of the sale value of the subject property. mean that the valuation cannot be relied upon. Rather, the declaration has been included to ensure transparency Others: • Considering the unorganized nature of real estate markets in India, all comparable evidence (if any) provided in of the fact that – in the current extraordinary circumstances – less certainty can be attached to the valuation than the valuation report has been limited to the basic details such as the area of asset, rate at which transacted, broad would otherwise be the case. The material uncertainty clause is to serve as a precaution and does not invalidate location, etc. other specific details would be provided only if the information is available in public domain the valuation.
• The actual market price achieved may be higher or lower than our estimate of value depending upon the Values may change more rapidly and significantly than during standard market conditions. Given the unknown circumstances of the transaction, nature of the business, etc. The knowledge, negotiating ability and motivation future impact that COVID-19 might have on the real estate market and the difficulty in differentiating between of the buyers and sellers and the applicability of a discount or premium for control will also affect actual market short term impacts and long-term structural changes, we recommend that you keep the valuation contained price achieved. Accordingly, our valuation conclusion may not necessarily be the price at which actual within this report under frequent review transaction takes place Additional: • In the current uncertain environment caused by the outbreak of the Novel Coronavirus (COVID-19), we have • We have assumed that the business continues normally without any disruptions due to statutory or other considered / relooked at various asset/ market specific parameters and have adopted heuristic/ careful external/internal occurrences interventions (including but not limited to the points mentioned below) to our projected cashflows based on our Other • Please note that all the factual information such as tenants’ leasable area, lease details such as lease rent, lease view as of the date of valuation. Assumptions: commencement and lease end date, lock – in period, escalation terms, etc. pertaining to the subject properties is ▪ based on the appropriate relevant documents provided by the Client and the same has been adopted for the Limited/ no growth in rent and ARR has been considered over the next few quarters ▪ purpose of this valuation exercise. While we have reviewed a few lease deeds on a sample basis, the Construction timelines have been delayed from the earlier estimates ▪ Consultants do not take any responsibility towards authenticity of the rent rolls provided by the Client. Any Considering challenges in the short term, timelines have been extended for new space take-up/ future change in the above information will have an impact on the assessed value and in that case the Valuer will have leasing ▪ to relook at the assessed value. The relevant information sources are represented in section 2.5 For the operational hotels, occupancy has been rationalized in the short term” • All measurements, areas and ages quoted in our report are approximate • We are not advisors with respect to legal tax and regulatory matters for the transaction. No investigation of the respective Special Purpose Vehicles (SPVs) holding the assets’ claim to title of assets has been made for the purpose of this Report and the SPVs’ claim to such rights have been assumed to be valid. No consideration has been given to liens or encumbrances against the assets. Therefore, no responsibility is assumed for matters of a legal nature • Kindly note that we have undertaken a quarterly assessment of cash flows for the purpose of the valuations
SUMMARY VALUATION REPORT 219 EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
2 Valuation Approach & Methodology B. Discounted Cash Flow Method Using this valuation method, future cash flows from the property are forecasted using precisely stated 2.1 Scope of Valuation assumptions. This method allows for the explicit modelling of income associated with the property. These future financial benefits are then discounted to a present-day value (valuation date) at an appropriate discount The valuation exercise is aimed at the assessment of the Market Value (MV) of the subject property. In rate. A variation of the Discounted Cash Flow Method is illustrated below: considering the value of the property, the Valuer has considered the guidelines laid out in the Appraisal and Valuation Manual published by the Royal Institution of Chartered Surveyors (RICS). B.1. Discounted Cash Flow Method using Rental Reversion The market practice in most commercial/ IT developments involves contracting tenants in the form of pre- 2.2 Basis of Valuation commitments at sub-market rentals to increase attractiveness of the property to prospective tenants – typically The valuations have been conducted in accordance with the RICS Valuation – Global Standards 2020 (Red extended to anchor tenants. Additionally, there are instances of tenants paying above-market rentals for certain Book Global Incorporating the IVSC International Valuation Standards issued in November 2019, effective properties as well (primarily owing to market conditions at the time of contracting the lease). In order to arrive from 31 January 2020) and is in compliance with the International Valuation Standards (IVS). The valuation at a unit value for these tenancies, the Valuer has considered the impact of such sub/ above market leases on exercise has been undertaken by appropriately qualified Valuer and would be aimed at assessing the Market the valuation of the subject property. Value of subject properties. As per the Valuation and Guidance Notes issued by the Royal Institution of Chartered Surveyors (RICS) the 2.4 Approach and Methodology Adopted market value is defined as: A large number of leases at the subject properties were executed at rentals prevalent at the time of signing of ‘The estimated amount for which an asset or liability should exchange on the valuation date between a such leases or at a discount to prevailing market rental (for a few anchor tenants). Since the real estate industry willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the is dynamic and is influenced by various factors (such as existing supply, tenants looking at spaces, quality of parties had each acted knowledgeably, prudently and without compulsion’. spaces available in the market, overall health of the economy, existing rentals, future growth plans, etc.) at a particular point in time, negotiated rentals may tend to move away from the prevalent market rents over a 2.3 Approach and Methodology period of time. It has also been witnessed that the market rents for some properties or sub markets increase or decrease at a rate significantly different from those agreed to in initial leases. These factors reinforce the need The purpose of this valuation exercise is to estimate the Market Value (MV) of the subject properties. Market to review each of these leases in isolation to assess the intrinsic value of the property under review. Value is derived through the following Methodologies: Considering the objective of this exercise and the nature of asset involved, the value of the office component in the subject properties has been assessed through the Discounted Cash Flow Method using Rental Reversion and the value of the Solar Park and hotel component at the respective properties have been valued using Discounted Cash Flow Method. Further, the following steps have been adopted as part of the valuation for the respective subject properties (assets).
Asset-specific Review:
1. As the first step to the valuation of the asset, the rent rolls (and the corresponding lease deeds on a sample basis) were reviewed to identify tenancy characteristics for the asset. As part of the rent roll review, top 10 tenants have been reviewed from their lease terms perspective. For anchor tenants, 2.3.1 Direct Comparison Approach discounts on marginal rent or additional lease-up timeframe have been adopted upon lease reversion. In ‘Direct Comparison Approach’, the subject property is compared to similar properties that have actually been sold in an arms-length transaction or are offered for sale (after deducting for value of built-up structure 2. Title documents and architect certificates were reviewed for validation of area details, ownership of located thereon). The comparable evidence gathered during research is adjusted for premiums and discounts the asset based on property specific attributes to reflect the underlying value of the property. Micro-market Review: 2.3.2 Income Approach 1. A detailed assessment of the site and surroundings has been undertaken with respect to the The income approach is based on the premise that value of an income - producing asset is a function of future prevalent activities, change in dynamics impacting the values and the optimal use of the respective benefits and income derived from that asset. There are two commonly used methods of the income approach properties vis-à-vis their surrounding sub-market, etc. Further, a primary and secondary research in real estate valuation namely, direct capitalization and discounted cash flow (DCF). exercise has been carried out in the catchment areas for the respective assets to ascertain the A. Direct Capitalization Method transaction activity of commercial, retail and hospitality developments. This has been achieved through interactions with various market players such as developers, real estate brokers, key office Direct capitalization involves capitalizing a ‘normalized’ single - year net income estimated by an appropriate tenants, hospitality occupiers, etc. Peers to the assets were identified in terms of potential yield. This approach is best utilized with stable revenue producing assets, whereby there is little volatility in competition (both completed and under-construction/planned assets), comparable recent lease the net annual income. transactions witnessed in the micro-market were analysed along with the historical leasing and re- leasing history within the asset over the last 2 – 3 years. This was undertaken to assess the applicable market rent (applicable rental for the micro-market where the asset is located) and
220 SUMMARY VALUATION REPORT EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
2 Valuation Approach & Methodology B. Discounted Cash Flow Method Using this valuation method, future cash flows from the property are forecasted using precisely stated 2.1 Scope of Valuation assumptions. This method allows for the explicit modelling of income associated with the property. These future financial benefits are then discounted to a present-day value (valuation date) at an appropriate discount The valuation exercise is aimed at the assessment of the Market Value (MV) of the subject property. In rate. A variation of the Discounted Cash Flow Method is illustrated below: considering the value of the property, the Valuer has considered the guidelines laid out in the Appraisal and Valuation Manual published by the Royal Institution of Chartered Surveyors (RICS). B.1. Discounted Cash Flow Method using Rental Reversion The market practice in most commercial/ IT developments involves contracting tenants in the form of pre- 2.2 Basis of Valuation commitments at sub-market rentals to increase attractiveness of the property to prospective tenants – typically The valuations have been conducted in accordance with the RICS Valuation – Global Standards 2020 (Red extended to anchor tenants. Additionally, there are instances of tenants paying above-market rentals for certain Book Global Incorporating the IVSC International Valuation Standards issued in November 2019, effective properties as well (primarily owing to market conditions at the time of contracting the lease). In order to arrive from 31 January 2020) and is in compliance with the International Valuation Standards (IVS). The valuation at a unit value for these tenancies, the Valuer has considered the impact of such sub/ above market leases on exercise has been undertaken by appropriately qualified Valuer and would be aimed at assessing the Market the valuation of the subject property. Value of subject properties. As per the Valuation and Guidance Notes issued by the Royal Institution of Chartered Surveyors (RICS) the 2.4 Approach and Methodology Adopted market value is defined as: A large number of leases at the subject properties were executed at rentals prevalent at the time of signing of ‘The estimated amount for which an asset or liability should exchange on the valuation date between a such leases or at a discount to prevailing market rental (for a few anchor tenants). Since the real estate industry willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the is dynamic and is influenced by various factors (such as existing supply, tenants looking at spaces, quality of parties had each acted knowledgeably, prudently and without compulsion’. spaces available in the market, overall health of the economy, existing rentals, future growth plans, etc.) at a particular point in time, negotiated rentals may tend to move away from the prevalent market rents over a 2.3 Approach and Methodology period of time. It has also been witnessed that the market rents for some properties or sub markets increase or decrease at a rate significantly different from those agreed to in initial leases. These factors reinforce the need The purpose of this valuation exercise is to estimate the Market Value (MV) of the subject properties. Market to review each of these leases in isolation to assess the intrinsic value of the property under review. Value is derived through the following Methodologies: Considering the objective of this exercise and the nature of asset involved, the value of the office component in the subject properties has been assessed through the Discounted Cash Flow Method using Rental Reversion and the value of the Solar Park and hotel component at the respective properties have been valued using Discounted Cash Flow Method. Further, the following steps have been adopted as part of the valuation for the respective subject properties (assets).
Asset-specific Review:
1. As the first step to the valuation of the asset, the rent rolls (and the corresponding lease deeds on a sample basis) were reviewed to identify tenancy characteristics for the asset. As part of the rent roll review, top 10 tenants have been reviewed from their lease terms perspective. For anchor tenants, 2.3.1 Direct Comparison Approach discounts on marginal rent or additional lease-up timeframe have been adopted upon lease reversion. In ‘Direct Comparison Approach’, the subject property is compared to similar properties that have actually been sold in an arms-length transaction or are offered for sale (after deducting for value of built-up structure 2. Title documents and architect certificates were reviewed for validation of area details, ownership of located thereon). The comparable evidence gathered during research is adjusted for premiums and discounts the asset based on property specific attributes to reflect the underlying value of the property. Micro-market Review: 2.3.2 Income Approach 1. A detailed assessment of the site and surroundings has been undertaken with respect to the The income approach is based on the premise that value of an income - producing asset is a function of future prevalent activities, change in dynamics impacting the values and the optimal use of the respective benefits and income derived from that asset. There are two commonly used methods of the income approach properties vis-à-vis their surrounding sub-market, etc. Further, a primary and secondary research in real estate valuation namely, direct capitalization and discounted cash flow (DCF). exercise has been carried out in the catchment areas for the respective assets to ascertain the A. Direct Capitalization Method transaction activity of commercial, retail and hospitality developments. This has been achieved through interactions with various market players such as developers, real estate brokers, key office Direct capitalization involves capitalizing a ‘normalized’ single - year net income estimated by an appropriate tenants, hospitality occupiers, etc. Peers to the assets were identified in terms of potential yield. This approach is best utilized with stable revenue producing assets, whereby there is little volatility in competition (both completed and under-construction/planned assets), comparable recent lease the net annual income. transactions witnessed in the micro-market were analysed along with the historical leasing and re- leasing history within the asset over the last 2 – 3 years. This was undertaken to assess the applicable market rent (applicable rental for the micro-market where the asset is located) and
SUMMARY VALUATION REPORT 221 EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
applicable marginal rental (the Consultants’ view on rental for the asset – used for leasing vacant lease roll-overs to factor potential rent free terms as well as outflows towards brokerage. For all spaces as well as upon releasing). assets, the Valuer has looked at the operational revenues and expenses of the respective assets to understand the recurring, non-recurring, recoverable and non-recoverable expenses and accordingly 2. The Consultants also analysed the historical leasing within the asset for anchor tenants to identify modelled the common area maintenance income and operational expenses for the asset. For the discount that is extended to such tenants at the time of fresh leasing or lease renewals. Every Embassy Manyata, Embassy GolfLinks and Embassy TechZone, common area maintenance is lease deed of large anchor tenants were analysed and applicable discount to marginal rental was managed by an external agency and accordingly, no CAM margin has been considered during the estimated for individual leases. For other tenants occupying relatively large space within the course of operations. However, for assessing the exit cash flows, the Valuer has assumed that on a properties, the Valuer assumed the leases to revert to marginal rentals (duly escalated from the date notional exit, market-led CAM charges and hence CAM margin would be accruable to a potential of valuation) post expiry of the lease, factoring appropriate re-leasing time. buyer and the same has been adopted during capitalization.
Cash Flow Projections: 4. The net income on quarterly basis have been projected over the next 10 years and the 1 year forward NOI (for 11th year) as of end of year 10 has been capitalized to assess the terminal value of 1. The cash flows for the operational and under-construction/proposed area were projected separately the development. The quarterly net income over the next 10 years along with the terminal value to arrive at their respective value conclusion. during the end of year 10 have been discounted at a suitable discount rate to arrive at the net present value of the asset through this approach. 2. The Valuer has utilized the EBIDTA to arrive at the value of the subject properties. The following steps were undertaken to arrive at the value for operational and under-construction/proposed area 5. For the hospitality component, future cash flows from the property, were projected based on our respectively. assessment of ARRs and Occupancy. Adjustments for other revenues and recurring operational expenses, have been adopted in-line with prevalent market dynamics. The net income on quarterly The Valuer has projected future cash flows from the property based on existing lease terms for the basis have been projected over the next 10 years and the 1 year forward EBITDA (for 11th year) as operational area till the expiry of the leases or re-negotiation (using the variance analysis), of end of year 10 has been capitalized to assess the terminal value of the development. The whichever is earlier. Post which, the lease terms have been aligned with marginal rentals. For quarterly net income over the next 10 years along with the terminal value during the end of year 10 vacant area and under-construction/proposed area, the Valuer has projected the marginal rent led have been discounted at a suitable discount rate to arrive at the net present value of the asset. cash flows factoring appropriate lease-up time frame for vacant/under-construction/proposed area. th These cash flows have been projected for 10-year duration from the date of valuation and for 11 2.5 Information Sources for Valuation year (for assessment of terminal value). These future financial benefits are then discounted to a present-day value (valuation date) at an appropriate discount rate. Property related information referred to for the valuation exercise has been provided by the Client unless otherwise mentioned. The Valuer has assumed the documents to be a true copy of the original. The rent rolls For each lease, the following steps have been undertaken to assess the rental over a 10-year time have been cross-checked with the lease deeds on a sample basis to verify the authenticity. Additionally, horizon: wherever possible, the Valuer has independently revalidated the information by reviewing the originals as provided by the Client. a. Step 1: Project the rentals for identified tenancies up to the period of lease expiry, lock- in expiry, first escalation, second escalation, etc. whichever is applicable. In the event 2.6 Scope of Services for Value Assessment Service Provider of vacant/ to be leased spaces, market-led rentals to be adopted with suitable lease-up time CBRE has been engaged by the Instructing Party to provide value assessment services and accordingly, would be responsible for the below scope as part of this exercise. b. Generating a marginal rental stream for identified tenancies for the time period Step 2: ▪ Provide market intelligence to the Valuer on the following aspects: similar to the cash flows drawn in the aforementioned step o Economic and Investment Overview o India Real Estate Overview c. Step 3: In the event the escalated contracted rental is above the marginal rent (viz. by ▪ IT/ ITES Industry Dynamics 10% for Bengaluru/ Mumbai assets & 15% for Pune/ Noida assets), the contracted ▪ Key Office Markets terms are discarded, and the terms are reverted to market. In the event the escalated ▪ Outlook contracted rent is below the marginal rent by the threshold highlighted above, the o For cities housing Embassy REIT Assets contracted terms are adopted going forward until the next lease review/ renewal. Intent ▪ Key Office Markets of this step is to project the rental for respective leases until lease expiry as well as post ▪ General market practices expiry ▪ Demand Supply for Key Office Markets & Rental Trends ▪ Outlook d. Step 4: Computing the monthly income based on rentals projected as part of Step 3 and ▪ Review rent roll and forecast cash flows from the respective assets for the Valuer to independently translating the same to a quarterly income (for the next 10 years and 11th year – review and work towards assessing the valuation of each Asset considered for calculation of terminal value) Official Signatory for Value Assessment Service Provider: 3. Adjustments for other revenues and recurring operational expenses, fit-out income (if any – projected till first term expiry and discounted to present day – the same has been considered below the NOI and does not get capitalized) and vacancy provision have been adopted in-line with prevalent market dynamics. In addition, appropriate rent-free periods have been adopted during Name: Vamshi KK Nakirekanti | MRICS | FIE | FIV | CEng (India)
Designation: Executive Director, Head – Valuation and Advisory Services, India & South East Asia Firm: CBRE South Asia Pvt Ltd
222 SUMMARY VALUATION REPORT EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT applicable marginal rental (the Consultants’ view on rental for the asset – used for leasing vacant lease roll-overs to factor potential rent free terms as well as outflows towards brokerage. For all spaces as well as upon releasing). assets, the Valuer has looked at the operational revenues and expenses of the respective assets to understand the recurring, non-recurring, recoverable and non-recoverable expenses and accordingly 2. The Consultants also analysed the historical leasing within the asset for anchor tenants to identify modelled the common area maintenance income and operational expenses for the asset. For the discount that is extended to such tenants at the time of fresh leasing or lease renewals. Every Embassy Manyata, Embassy GolfLinks and Embassy TechZone, common area maintenance is lease deed of large anchor tenants were analysed and applicable discount to marginal rental was managed by an external agency and accordingly, no CAM margin has been considered during the estimated for individual leases. For other tenants occupying relatively large space within the course of operations. However, for assessing the exit cash flows, the Valuer has assumed that on a properties, the Valuer assumed the leases to revert to marginal rentals (duly escalated from the date notional exit, market-led CAM charges and hence CAM margin would be accruable to a potential of valuation) post expiry of the lease, factoring appropriate re-leasing time. buyer and the same has been adopted during capitalization.
Cash Flow Projections: 4. The net income on quarterly basis have been projected over the next 10 years and the 1 year forward NOI (for 11th year) as of end of year 10 has been capitalized to assess the terminal value of 1. The cash flows for the operational and under-construction/proposed area were projected separately the development. The quarterly net income over the next 10 years along with the terminal value to arrive at their respective value conclusion. during the end of year 10 have been discounted at a suitable discount rate to arrive at the net present value of the asset through this approach. 2. The Valuer has utilized the EBIDTA to arrive at the value of the subject properties. The following steps were undertaken to arrive at the value for operational and under-construction/proposed area 5. For the hospitality component, future cash flows from the property, were projected based on our respectively. assessment of ARRs and Occupancy. Adjustments for other revenues and recurring operational expenses, have been adopted in-line with prevalent market dynamics. The net income on quarterly The Valuer has projected future cash flows from the property based on existing lease terms for the basis have been projected over the next 10 years and the 1 year forward EBITDA (for 11th year) as operational area till the expiry of the leases or re-negotiation (using the variance analysis), of end of year 10 has been capitalized to assess the terminal value of the development. The whichever is earlier. Post which, the lease terms have been aligned with marginal rentals. For quarterly net income over the next 10 years along with the terminal value during the end of year 10 vacant area and under-construction/proposed area, the Valuer has projected the marginal rent led have been discounted at a suitable discount rate to arrive at the net present value of the asset. cash flows factoring appropriate lease-up time frame for vacant/under-construction/proposed area. th These cash flows have been projected for 10-year duration from the date of valuation and for 11 2.5 Information Sources for Valuation year (for assessment of terminal value). These future financial benefits are then discounted to a present-day value (valuation date) at an appropriate discount rate. Property related information referred to for the valuation exercise has been provided by the Client unless otherwise mentioned. The Valuer has assumed the documents to be a true copy of the original. The rent rolls For each lease, the following steps have been undertaken to assess the rental over a 10-year time have been cross-checked with the lease deeds on a sample basis to verify the authenticity. Additionally, horizon: wherever possible, the Valuer has independently revalidated the information by reviewing the originals as provided by the Client. a. Step 1: Project the rentals for identified tenancies up to the period of lease expiry, lock- in expiry, first escalation, second escalation, etc. whichever is applicable. In the event 2.6 Scope of Services for Value Assessment Service Provider of vacant/ to be leased spaces, market-led rentals to be adopted with suitable lease-up time CBRE has been engaged by the Instructing Party to provide value assessment services and accordingly, would be responsible for the below scope as part of this exercise. b. Generating a marginal rental stream for identified tenancies for the time period Step 2: ▪ Provide market intelligence to the Valuer on the following aspects: similar to the cash flows drawn in the aforementioned step o Economic and Investment Overview o India Real Estate Overview c. Step 3: In the event the escalated contracted rental is above the marginal rent (viz. by ▪ IT/ ITES Industry Dynamics 10% for Bengaluru/ Mumbai assets & 15% for Pune/ Noida assets), the contracted ▪ Key Office Markets terms are discarded, and the terms are reverted to market. In the event the escalated ▪ Outlook contracted rent is below the marginal rent by the threshold highlighted above, the o For cities housing Embassy REIT Assets contracted terms are adopted going forward until the next lease review/ renewal. Intent ▪ Key Office Markets of this step is to project the rental for respective leases until lease expiry as well as post ▪ General market practices expiry ▪ Demand Supply for Key Office Markets & Rental Trends ▪ Outlook d. Step 4: Computing the monthly income based on rentals projected as part of Step 3 and ▪ Review rent roll and forecast cash flows from the respective assets for the Valuer to independently translating the same to a quarterly income (for the next 10 years and 11th year – review and work towards assessing the valuation of each Asset considered for calculation of terminal value) Official Signatory for Value Assessment Service Provider: 3. Adjustments for other revenues and recurring operational expenses, fit-out income (if any – projected till first term expiry and discounted to present day – the same has been considered below the NOI and does not get capitalized) and vacancy provision have been adopted in-line with prevalent market dynamics. In addition, appropriate rent-free periods have been adopted during Name: Vamshi KK Nakirekanti | MRICS | FIE | FIV | CEng (India)
Designation: Executive Director, Head – Valuation and Advisory Services, India & South East Asia Firm: CBRE South Asia Pvt Ltd
SUMMARY VALUATION REPORT 223 EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
3 Nature of the Interest of the Embassy REIT 4 Value Summary
The table below highlights the nature of interest of the Embassy REIT: The following table highlights the summary of the market value of each property which is a part of the said Embassy REIT portfolio as on September 30, 2020: Remainder of term in case of Property Interest Valued Interest Embassy REIT holds Leasehold (approx.) Market Value (INR mn) Embassy Manyata, Bengaluru Freehold* 100.0% NA Property Asset Type Leasable Area Under Completed construction Total Express Towers, Mumbai Freehold 100.0% NA (UC) / Proposed Mixed-use Completed office – 11.8 msf Embassy 247, Mumbai Freehold 100.0% NA Embassy Manyata, (Office (IT/ ITeS SEZ/ Non- Proposed/ UC* office - 3.1 msf 135,267 25,294 160,561 Bengaluru SEZ^), Hotel, Retail, UC Hotel (5 star) - 266 keys First International Financial Center, Leasehold 100.0% 68 Years Convention Centre) UC Hotel (3 star) - 353 keys Mumbai Express Towers, Office (Non-SEZ) Completed office - 0.5 msf 17,722 - 17,722 Embassy TechZone, Pune Leasehold 100.0% 80 Years Mumbai Embassy 247, Mumbai Office (Non-SEZ) Completed office - 1.2 msf 16,404 - 16,404 First International Leasehold 100.0% 80 Years Embassy Quadron, Pune Financial Centre, Office (Non-SEZ) Completed office - 0.4 msf 13,908 - 13,908 Mumbai Embassy Qubix, Pune Freehold 100.0% NA Embassy TechZone, Office Completed office - 2.2 msf 15,096 6,511 21,607 Pune (IT/ ITeS SEZ) Proposed/ UC office - 3.3 msf Embassy Quadron, Office Embassy Oxygen, Noida Leasehold 100.0% 77 Years Completed office - 1.9 msf 13,104 - 13,104 Pune (IT/ ITeS SEZ) Office Embassy Galaxy, Noida Leasehold 100.0% 76 Years Completed office - 1.5 msf 10,153 - Embassy Qubix, Pune (IT/ ITeS SEZ) 10,153 Embassy Oxygen, Office Completed office - 2.5 msf 19,217 2,025 21,242 Embassy GolfLinks, Bengaluru Freehold 50.0% NA Noida (IT/ ITeS SEZ) Proposed/ UC office - 0.7 msf Embassy Galaxy, Office (Non-SEZ) Completed office - 1.4 msf 8,783 - 8,783 Embassy One, Bengaluru Freehold 100.0% NA Noida Mixed-use Embassy One, Office & Retail - 0.3 msf Hilton at GolfLinks, Bengaluru Freehold 100.0% NA (Office (Non-SEZ), Hotel, 12,077 - 12,077 Bengaluru Hotel (5 star) - 230 Keys Retail) Embassy Energy, Bellary District, Freehold 100.0% NA Hilton at Embassy Karnataka Hotel Hotel (5 star) - 247 Keys 4,375 - 4,375 GolfLinks, Bengaluru *Excluding the M3 block which is being developed on a leasehold land parcel (6.64 Acres) Embassy Energy, Installed capacity of 130 MW DC (100 Bellary District, Solar park 10,002 - 10,002 MW AC) Karnataka Total – 100% owned assets 276,108 33,830 309,939 Embassy GolfLinks, Bengaluru Office (Non-SEZ) Completed office - 2.7 msf 27,428 - 27,4281 Total 303,536 33,830 337,366 1 Note: Indicative of Embassy REIT’s economic interest in the asset, viz. 50% *UC -under construction, ^SEZ – Special Economic Zone
224 SUMMARY VALUATION REPORT EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
3 Nature of the Interest of the Embassy REIT 4 Value Summary
The table below highlights the nature of interest of the Embassy REIT: The following table highlights the summary of the market value of each property which is a part of the said Embassy REIT portfolio as on September 30, 2020: Remainder of term in case of Property Interest Valued Interest Embassy REIT holds Leasehold (approx.) Market Value (INR mn) Embassy Manyata, Bengaluru Freehold* 100.0% NA Property Asset Type Leasable Area Under Completed construction Total Express Towers, Mumbai Freehold 100.0% NA (UC) / Proposed Mixed-use Completed office – 11.8 msf Embassy 247, Mumbai Freehold 100.0% NA Embassy Manyata, (Office (IT/ ITeS SEZ/ Non- Proposed/ UC* office - 3.1 msf 135,267 25,294 160,561 Bengaluru SEZ^), Hotel, Retail, UC Hotel (5 star) - 266 keys First International Financial Center, Leasehold 100.0% 68 Years Convention Centre) UC Hotel (3 star) - 353 keys Mumbai Express Towers, Office (Non-SEZ) Completed office - 0.5 msf 17,722 - 17,722 Embassy TechZone, Pune Leasehold 100.0% 80 Years Mumbai Embassy 247, Mumbai Office (Non-SEZ) Completed office - 1.2 msf 16,404 - 16,404 First International Leasehold 100.0% 80 Years Embassy Quadron, Pune Financial Centre, Office (Non-SEZ) Completed office - 0.4 msf 13,908 - 13,908 Mumbai Embassy Qubix, Pune Freehold 100.0% NA Embassy TechZone, Office Completed office - 2.2 msf 15,096 6,511 21,607 Pune (IT/ ITeS SEZ) Proposed/ UC office - 3.3 msf Embassy Quadron, Office Embassy Oxygen, Noida Leasehold 100.0% 77 Years Completed office - 1.9 msf 13,104 - 13,104 Pune (IT/ ITeS SEZ) Office Embassy Galaxy, Noida Leasehold 100.0% 76 Years Completed office - 1.5 msf 10,153 - Embassy Qubix, Pune (IT/ ITeS SEZ) 10,153 Embassy Oxygen, Office Completed office - 2.5 msf 19,217 2,025 21,242 Embassy GolfLinks, Bengaluru Freehold 50.0% NA Noida (IT/ ITeS SEZ) Proposed/ UC office - 0.7 msf Embassy Galaxy, Office (Non-SEZ) Completed office - 1.4 msf 8,783 - 8,783 Embassy One, Bengaluru Freehold 100.0% NA Noida Mixed-use Embassy One, Office & Retail - 0.3 msf Hilton at GolfLinks, Bengaluru Freehold 100.0% NA (Office (Non-SEZ), Hotel, 12,077 - 12,077 Bengaluru Hotel (5 star) - 230 Keys Retail) Embassy Energy, Bellary District, Freehold 100.0% NA Hilton at Embassy Karnataka Hotel Hotel (5 star) - 247 Keys 4,375 - 4,375 GolfLinks, Bengaluru *Excluding the M3 block which is being developed on a leasehold land parcel (6.64 Acres) Embassy Energy, Installed capacity of 130 MW DC (100 Bellary District, Solar park 10,002 - 10,002 MW AC) Karnataka Total – 100% owned assets 276,108 33,830 309,939 Embassy GolfLinks, Bengaluru Office (Non-SEZ) Completed office - 2.7 msf 27,428 - 27,4281 Total 303,536 33,830 337,366 1 Note: Indicative of Embassy REIT’s economic interest in the asset, viz. 50% *UC -under construction, ^SEZ – Special Economic Zone
SUMMARY VALUATION REPORT 225 EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5 Assets
5.1 Embassy Manyata
Property Name: Embassy Manyata is a commercial office development located along Outer Ring Road, Nagavara, Bengaluru, Karnataka Property Address: Nagavara Village, Kasaba Hobli, Bengaluru North Taluk, Bengaluru District and Rachenahalli and Thanisandra Villages, Krishnarajapuram Hobli, Bengaluru East Taluk, Bengaluru District, Karnataka Land Area: Based on review of the title report (for Manyata Promoters Pvt Ltd and M3 Block respectively), the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 121.76 acres Brief Description: The subject property is the second largest commercial office asset in India (in terms of scale), largest in Bengaluru and is a landmark in North Bengaluru. The property is accessible through the Nagavara Outer Ring Road emanating from Hebbal. Further, the subject development is strategically located in proximity to micro- markets of Thanisandra & Hennur Road which are amongst the fastest developing vectors in North Bengaluru. The subject property is located in close proximity to the Nagavara Outer Ring Road, which connects the subject location to prominent locations such as Yeshwanthpur, KR Puram, Whitefield, Sarjapur Outer Ring Road, Old Madras Road, etc. Further, it is located at a distance of 1-2 km from Nagavara Junction, 3-4 km from Hebbal Junction, 7-8 km from Yelahanka Junction, 11-14 km from MG Road (CBD) and 29-31 km from Kempegowda International Airport Statement of Assets Based on review of various documents (such as rent roll, lease deeds, Architect’s Certificate, etc.), the subject (sf): property is an operational office asset with approximately 11.8 msf of completed leasable area out of which occupancy is approximately 97.0% as on the date of valuation. Table below highlights the leasable area for individual blocks that form part of the subject development:
Particular Area (sf) Occupancy (%)
Assumptions, This summary valuation report is provided subject to assumptions, disclaimers, limitations and qualifications detailed Completed Blocks 11,751,174 97.0% Disclaimers, throughout this report. Reliance on this report and extension of our liability is conditional upon the reader’s Limitations & acknowledgement and understanding of these statements. This valuation is for the use of the parties as mentioned in Under Construction Blocks 1,652,929 NA Qualifications Section 1.2 of this summary report. Proposed Blocks 1,415,550 NA Total – Office/Retail 14,819,653 Prepared by: iVAS Partners, represented by Mr. Manish Gupta Hotel 619 keys (including convention (Hotel - 722,678 NA centre) ~ Under Construction Convention – 58,000) Official Signatory: Source: Architect certificates, rent roll, lease deeds; Note – office & retail refers to leasable area while hotel & convention refers to developable area
Name: Mr. Manish Gupta Designation: Partner, iVAS Partners Valuer Registration Number: IBBI/RV-E/02/2020/112
226 SUMMARY VALUATION REPORT EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5 Assets
5.1 Embassy Manyata
Property Name: Embassy Manyata is a commercial office development located along Outer Ring Road, Nagavara, Bengaluru, Karnataka Property Address: Nagavara Village, Kasaba Hobli, Bengaluru North Taluk, Bengaluru District and Rachenahalli and Thanisandra Villages, Krishnarajapuram Hobli, Bengaluru East Taluk, Bengaluru District, Karnataka Land Area: Based on review of the title report (for Manyata Promoters Pvt Ltd and M3 Block respectively), the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 121.76 acres Brief Description: The subject property is the second largest commercial office asset in India (in terms of scale), largest in Bengaluru and is a landmark in North Bengaluru. The property is accessible through the Nagavara Outer Ring Road emanating from Hebbal. Further, the subject development is strategically located in proximity to micro- markets of Thanisandra & Hennur Road which are amongst the fastest developing vectors in North Bengaluru. The subject property is located in close proximity to the Nagavara Outer Ring Road, which connects the subject location to prominent locations such as Yeshwanthpur, KR Puram, Whitefield, Sarjapur Outer Ring Road, Old Madras Road, etc. Further, it is located at a distance of 1-2 km from Nagavara Junction, 3-4 km from Hebbal Junction, 7-8 km from Yelahanka Junction, 11-14 km from MG Road (CBD) and 29-31 km from Kempegowda International Airport Statement of Assets Based on review of various documents (such as rent roll, lease deeds, Architect’s Certificate, etc.), the subject (sf): property is an operational office asset with approximately 11.8 msf of completed leasable area out of which occupancy is approximately 97.0% as on the date of valuation. Table below highlights the leasable area for individual blocks that form part of the subject development:
Particular Area (sf) Occupancy (%)
Assumptions, This summary valuation report is provided subject to assumptions, disclaimers, limitations and qualifications detailed Completed Blocks 11,751,174 97.0% Disclaimers, throughout this report. Reliance on this report and extension of our liability is conditional upon the reader’s Limitations & acknowledgement and understanding of these statements. This valuation is for the use of the parties as mentioned in Under Construction Blocks 1,652,929 NA Qualifications Section 1.2 of this summary report. Proposed Blocks 1,415,550 NA Total – Office/Retail 14,819,653 Prepared by: iVAS Partners, represented by Mr. Manish Gupta Hotel 619 keys (including convention (Hotel - 722,678 NA centre) ~ Under Construction Convention – 58,000) Official Signatory: Source: Architect certificates, rent roll, lease deeds; Note – office & retail refers to leasable area while hotel & convention refers to developable area
Name: Mr. Manish Gupta Designation: Partner, iVAS Partners Valuer Registration Number: IBBI/RV-E/02/2020/112
SUMMARY VALUATION REPORT 227 EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
Location Map 5.2 Express Towers
Property Name: ‘Express Towers’ is an operational office asset located along Barrister Rajni Patel Marg, Nariman Point, Mumbai Property Address: Barrister Rajni Patel Marg, Nariman Point, Mumbai Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 1.46 acres Brief Description: The subject property ‘Express Towers’ is an office asset situated in Nariman Point. The subject property is located opposite to the Oberoi Trident hotel. The G+25 floor storey structure was constructed in the late 1960s and has been refurbished in the past few years. Nariman Point is located at the southernmost tip of the Mumbai City, at a distance of approximately 1 - 2 km from the Churchgate Railway Station; approximately 25 - 28 km from the Domestic / International City Airport. Statement of Based on review of various documents (such as rent roll, Architect’s Certificate, etc.), the subject Assets (sf): property is an operational office asset with approximately 472,377 sf of completed leasable area, which is approximately 90.2% occupied as on the date of valuation. Also, the top 2 floors viz the 24th and 25th floor are not owned by the Client. Table below highlights the leasable area details for the subject development under the ownership of the Client.
Particular Leasable Area (sf) Occupancy (%) Completed Blocks 472,377 90.2% Under Construction Blocks - NA Proposed Blocks - NA Total 472,377
Key Assumptions Particulars Unit Details Source: Architect certificate, Rent roll, lease deeds; Construction assumptions Pending cost to complete INR mn 16,544* Location Map Proposed project completion timelines (all blocks) Quarter, Year Q3, FY 2025 Revenue assumptions (as on September 30, 2020) Lease completion Year FY 2025 In-place rent INR psf/mth 61 Marginal rent – IT office component INR psf/mth 91 Marginal rent – Non IT office component INR psf/mth 105 Marginal rent – Retail component INR psf/mth 118 Parking rent (Effective) INR / bay/mth 3,750 ARR – 5 star hotel INR / room / day 8,000 Stabilized Occupancy – 5 star hotel % 70% ARR – 3 star hotel INR / room / day 5,500 Stabilized Occupancy – 3 star hotel % 70% Other financial assumptions Cap rate – commercial components % 8.00% 7.14% Cap rate – hotel components % (viz. an EV-EBITDA multiple of 14) WACC rate (operational) % 12.03% WACC rate (under-construction/proposed) % 13.00% WACC rate (hotel) % 13.60% * Indicative of pending cost towards base build works and does not include the cost for refurbishments/ infrastructure Key Assumptions Particulars Unit Details upgrade works Revenue assumptions (as on September 30, 2020) Market Value: INR 160,561 Mn Lease completion Year FY 2022 In-place rent INR psf/mth 266^ Marginal Rent – Commercial office INR psf/mth 270 component Parking rent (Effective) INR / bay/mth - Other financial assumptions Cap rate – commercial components % 7.50% WACC rate (operational) % 12.03%
^denotes the weighted average rentals for leased office/restaurant spaces Market Value: INR 17,722 Mn
228 SUMMARY VALUATION REPORT EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
Location Map 5.2 Express Towers
Property Name: ‘Express Towers’ is an operational office asset located along Barrister Rajni Patel Marg, Nariman Point, Mumbai Property Address: Barrister Rajni Patel Marg, Nariman Point, Mumbai Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 1.46 acres Brief Description: The subject property ‘Express Towers’ is an office asset situated in Nariman Point. The subject property is located opposite to the Oberoi Trident hotel. The G+25 floor storey structure was constructed in the late 1960s and has been refurbished in the past few years. Nariman Point is located at the southernmost tip of the Mumbai City, at a distance of approximately 1 - 2 km from the Churchgate Railway Station; approximately 25 - 28 km from the Domestic / International City Airport. Statement of Based on review of various documents (such as rent roll, Architect’s Certificate, etc.), the subject Assets (sf): property is an operational office asset with approximately 472,377 sf of completed leasable area, which is approximately 90.2% occupied as on the date of valuation. Also, the top 2 floors viz the 24th and 25th floor are not owned by the Client. Table below highlights the leasable area details for the subject development under the ownership of the Client.
Particular Leasable Area (sf) Occupancy (%) Completed Blocks 472,377 90.2% Under Construction Blocks - NA Proposed Blocks - NA Total 472,377
Key Assumptions Particulars Unit Details Source: Architect certificate, Rent roll, lease deeds; Construction assumptions Pending cost to complete INR mn 16,544* Location Map Proposed project completion timelines (all blocks) Quarter, Year Q3, FY 2025 Revenue assumptions (as on September 30, 2020) Lease completion Year FY 2025 In-place rent INR psf/mth 61 Marginal rent – IT office component INR psf/mth 91 Marginal rent – Non IT office component INR psf/mth 105 Marginal rent – Retail component INR psf/mth 118 Parking rent (Effective) INR / bay/mth 3,750 ARR – 5 star hotel INR / room / day 8,000 Stabilized Occupancy – 5 star hotel % 70% ARR – 3 star hotel INR / room / day 5,500 Stabilized Occupancy – 3 star hotel % 70% Other financial assumptions Cap rate – commercial components % 8.00% 7.14% Cap rate – hotel components % (viz. an EV-EBITDA multiple of 14) WACC rate (operational) % 12.03% WACC rate (under-construction/proposed) % 13.00% WACC rate (hotel) % 13.60% * Indicative of pending cost towards base build works and does not include the cost for refurbishments/ infrastructure Key Assumptions Particulars Unit Details upgrade works Revenue assumptions (as on September 30, 2020) Market Value: INR 160,561 Mn Lease completion Year FY 2022 In-place rent INR psf/mth 266^ Marginal Rent – Commercial office INR psf/mth 270 component Parking rent (Effective) INR / bay/mth - Other financial assumptions Cap rate – commercial components % 7.50% WACC rate (operational) % 12.03%
^denotes the weighted average rentals for leased office/restaurant spaces Market Value: INR 17,722 Mn
SUMMARY VALUATION REPORT 229 EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5.3 Embassy 247 Key Particulars Unit Details Assumptions Property Name: ‘Embassy 247’ is an operational office asset located along LBS Road, Gandhinagar, Vikhroli West, Mumbai Revenue assumptions (as on September 30, 2020) Property Address: LBS Marg, Vikhroli (W), Mumbai, Maharashtra. Lease completion Year FY 2023 In-place rent INR psf/mth 99^ Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under Marginal rent – Commercial office INR psf/mth 110* the ownership of the Client is approximately 7.27 acres component Brief Description: The subject property, “Embassy 247”, is an operational office asset located along LBS Road in Gandhinagar, Marginal rent – Retail component INR psf/mth 78 Vikhroli West, Mumbai. The development is divided in three towers viz. A, B & C. The towers A & C are Parking rent (Effective) INR / bay/mth - identical to each other and have an elevation of 2 Basement + Ground + 11 upper floors. Tower B situated in Other financial assumptions between Tower A & C has an elevation of 2 Basement + Ground + 14 upper floors. Based on the site visit, it is Cap rate – commercial components % 8.00% understood that all the three towers are internally connected from basement to the 3rd floor and floors 10 and 11. WACC rate (operational) % 12.03% The entire development has a total completed leasable area of approximately 1,186,149 sf. The subject property is located in proximity to established residential and commercial locations within the city such as Bhandup, ^denotes the weighted average rentals for leased office/retail and food-court spaces Kanjurmarg, Ghatkopar etc. * Inclusive of car park rent
The subject property is located at a distance of approximately 28-30 km from the Central Business District of Market Value: INR 16,404 Mn Mumbai (viz. Nariman Point), approximately 11-12 km from Domestic Airport, approximately 10-12 km from the Chhatrapati Shivaji International Airport Terminal, Mumbai etc. Statement of Assets (sf): Based on information provided by the Client, the total completed leasable area considered for the purpose of this valuation is 1,186,149 sf. Table below highlights the leasable area details for the subject development:
Particular Leasable Area (sf) Occupancy (%) Completed Blocks 1,186,149 85.6% Under Construction Blocks - NA Proposed Blocks - NA Total 1,186,149 Source: Architect certificate, Rent roll, lease deeds;
Location Map
230 SUMMARY VALUATION REPORT EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5.3 Embassy 247 Key Particulars Unit Details Assumptions Property Name: ‘Embassy 247’ is an operational office asset located along LBS Road, Gandhinagar, Vikhroli West, Mumbai Revenue assumptions (as on September 30, 2020) Property Address: LBS Marg, Vikhroli (W), Mumbai, Maharashtra. Lease completion Year FY 2023 In-place rent INR psf/mth 99^ Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under Marginal rent – Commercial office INR psf/mth 110* the ownership of the Client is approximately 7.27 acres component Brief Description: The subject property, “Embassy 247”, is an operational office asset located along LBS Road in Gandhinagar, Marginal rent – Retail component INR psf/mth 78 Vikhroli West, Mumbai. The development is divided in three towers viz. A, B & C. The towers A & C are Parking rent (Effective) INR / bay/mth - identical to each other and have an elevation of 2 Basement + Ground + 11 upper floors. Tower B situated in Other financial assumptions between Tower A & C has an elevation of 2 Basement + Ground + 14 upper floors. Based on the site visit, it is Cap rate – commercial components % 8.00% understood that all the three towers are internally connected from basement to the 3rd floor and floors 10 and 11. WACC rate (operational) % 12.03% The entire development has a total completed leasable area of approximately 1,186,149 sf. The subject property is located in proximity to established residential and commercial locations within the city such as Bhandup, ^denotes the weighted average rentals for leased office/retail and food-court spaces Kanjurmarg, Ghatkopar etc. * Inclusive of car park rent
The subject property is located at a distance of approximately 28-30 km from the Central Business District of Market Value: INR 16,404 Mn Mumbai (viz. Nariman Point), approximately 11-12 km from Domestic Airport, approximately 10-12 km from the Chhatrapati Shivaji International Airport Terminal, Mumbai etc. Statement of Assets (sf): Based on information provided by the Client, the total completed leasable area considered for the purpose of this valuation is 1,186,149 sf. Table below highlights the leasable area details for the subject development:
Particular Leasable Area (sf) Occupancy (%) Completed Blocks 1,186,149 85.6% Under Construction Blocks - NA Proposed Blocks - NA Total 1,186,149 Source: Architect certificate, Rent roll, lease deeds;
Location Map
SUMMARY VALUATION REPORT 231 EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5.4 First International Finance Centre (FIFC) Key Particulars Unit Details Assumptions Property First International Finance Centre is a commercial office development located on Bandra Kurla Complex Road, Revenue assumptions (as on September 30, 2020) Name: Bandra Kurla Complex, Mumbai, Maharashtra Lease completion Year FY 2022 In-place rent INR psf/mth 297^ Property G-Block, Bandra Kurla Complex road, Bandra Kurla Complex, Mumbai, Maharashtra Marginal rent – Office Component INR psf/mth 285 Address: Marginal rent – Retail INR psf/mth 314 Parking rent (Effective) INR / bay/mth - Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 1.99 Acres Other financial assumptions Cap rate – commercial components % 7.75% Brief The subject property, “First International Finance Centre”, is an operational office asset located along BKC Road in WACC rate (operational) % 12.03% Description: G Block, Bandra Kurla Complex, Mumbai. This office asset has a total leasable area of approximately 658,390 sf. The development is operated as a condominium and is co-owned by two entities i.e., a leading bank and the Client. ^denotes the weighted average rentals for leased office/retail spaces Based on review of the title report for the subject property, the Client has an ownership of approximately 360,947 sf of the total area and the same has been considered for the purpose for this valuation exercise (this area will be Market INR 13,908 Mn considered as the subject property hereinafter). The subject property is located in proximity to locations such as Value: Kurla, Bandra, Santacruz etc., which are considered as established residential and commercial locations within the city.
The subject property is located at a distance of approximately 20-22 km from the Central Business District of Mumbai (viz. Nariman Point), approximately 6-8 km from Domestic Airport, approximately 8-9 km from the Chhatrapati Shivaji International Airport Terminal, Mumbai etc.
Statement of Based on review of various documents (such as rent roll, Architect’s Certificate, lease deeds, etc.), the subject Assets (sf): property is an operational office asset with approximately 360,947 sf of completed leasable area out of which approximately 77.5% is leased as on the date of valuation. Table below highlights the leasable area details for the subject development:
Particular Leasable Area (sf) Occupancy (%) Completed Blocks 360,947 77.5% Under Construction Blocks - NA Proposed Blocks - NA Total 360,947 Source: Architect certificate, Rent roll, lease deeds;
Location Map
232 SUMMARY VALUATION REPORT EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5.4 First International Finance Centre (FIFC) Key Particulars Unit Details Assumptions Property First International Finance Centre is a commercial office development located on Bandra Kurla Complex Road, Revenue assumptions (as on September 30, 2020) Name: Bandra Kurla Complex, Mumbai, Maharashtra Lease completion Year FY 2022 In-place rent INR psf/mth 297^ Property G-Block, Bandra Kurla Complex road, Bandra Kurla Complex, Mumbai, Maharashtra Marginal rent – Office Component INR psf/mth 285 Address: Marginal rent – Retail INR psf/mth 314 Parking rent (Effective) INR / bay/mth - Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 1.99 Acres Other financial assumptions Cap rate – commercial components % 7.75% Brief The subject property, “First International Finance Centre”, is an operational office asset located along BKC Road in WACC rate (operational) % 12.03% Description: G Block, Bandra Kurla Complex, Mumbai. This office asset has a total leasable area of approximately 658,390 sf. The development is operated as a condominium and is co-owned by two entities i.e., a leading bank and the Client. ^denotes the weighted average rentals for leased office/retail spaces Based on review of the title report for the subject property, the Client has an ownership of approximately 360,947 sf of the total area and the same has been considered for the purpose for this valuation exercise (this area will be Market INR 13,908 Mn considered as the subject property hereinafter). The subject property is located in proximity to locations such as Value: Kurla, Bandra, Santacruz etc., which are considered as established residential and commercial locations within the city.
The subject property is located at a distance of approximately 20-22 km from the Central Business District of Mumbai (viz. Nariman Point), approximately 6-8 km from Domestic Airport, approximately 8-9 km from the Chhatrapati Shivaji International Airport Terminal, Mumbai etc.
Statement of Based on review of various documents (such as rent roll, Architect’s Certificate, lease deeds, etc.), the subject Assets (sf): property is an operational office asset with approximately 360,947 sf of completed leasable area out of which approximately 77.5% is leased as on the date of valuation. Table below highlights the leasable area details for the subject development:
Particular Leasable Area (sf) Occupancy (%) Completed Blocks 360,947 77.5% Under Construction Blocks - NA Proposed Blocks - NA Total 360,947 Source: Architect certificate, Rent roll, lease deeds;
Location Map
SUMMARY VALUATION REPORT 233 5.5 Embassy TechZone
Property Name: ‘Embassy TechZone’ is an operational office asset located in Phase 2, Rajiv Gandhi Infotech Park, Hinjewadi, Pune, Maharashtra Property Address: Plot No. 3/A and Plot No. 3/B, Rajiv Gandhi Infotech Park, Hinjewadi, Phase-II, Village Marunji, Taluka Mulshi, District Pune, Maharashtra Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 67.45 acres Brief Description: ‘Embassy TechZone’, has been conceptualized as an office asset spread across a total land area of approximately 67.45 acres. The property is an office asset leased to various tenants and is also well equipped with number of facilities and amenities like food court, amphitheater, intra park shuttles, gymnasium, multilevel car parking, sports ground, etc.
‘Embassy TechZone’ is strategically located in Hinjewadi which is a prominent technology hub of Pune city. ‘Embassy TechZone’ is located at a distance of approximately 5 – 6 km from National Highway 48 (Connecting Mumbai – Pune – Bengaluru), 20 – 21 km from Pune CBD (Peth areas), 20 – 21 km from Pune Railway Station and approximately 26 – 27 km from Pune International Airport. Statement of Based on review of various documents (such as rent roll, lease deeds, Architect’s Certificate, etc.), the Valuer understands Assets (sf): that ‘Embassy TechZone’ is an operational office asset with approximately 2.2 msf of completed leasable area out of which occupancy is approximately 90.6% as on the date of valuation. Further, approximately 3.3 msf is currently under construction/ planning stage. Table below highlights the leasable area for individual blocks that form part of the subject development: Particular Leasable area (sf) Occupancy (%) Completed Blocks 2,160,055 90.6% Under Construction/ Proposed Blocks 3,312,891 NA Total 5,472,946
Source: Rent roll, lease deeds, architect certificate provided by the Client; Location Map
EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5.5 Embassy TechZone Key Assumptions Particulars Unit Details Construction assumptions Property Name: ‘Embassy TechZone’ is an operational office asset located in Phase 2, Rajiv Gandhi Infotech Park, Hinjewadi, Pune, Pending cost to complete (overall) INR mn 13,673* Maharashtra Proposed project completion timelines Year FY 2027 Property Address: Plot No. 3/A and Plot No. 3/B, Rajiv Gandhi Infotech Park, Hinjewadi, Phase-II, Village Marunji, Taluka Mulshi, District Revenue assumptions (as on September 30, 2020) Pune, Maharashtra Lease completion Year FY 2027 In-place rent INR psf/mth 49 Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership Marginal rent – IT SEZ office component INR psf/mth 48 of the Client is approximately 67.45 acres Parking rent (Effective) INR / bay/mth 1,500 Brief Description: ‘Embassy TechZone’, has been conceptualized as an office asset spread across a total land area of approximately 67.45 acres. The property is an office asset leased to various tenants and is also well equipped with number of facilities and amenities like Key Assumptions Particulars Unit Details food court, amphitheater, intra park shuttles, gymnasium, multilevel car parking, sports ground, etc. Other financial assumptions Cap rate – commercial components % 8.25% ‘Embassy TechZone’ is strategically located in Hinjewadi which is a prominent technology hub of Pune city. ‘Embassy WACC rate (operational) % 12.03% TechZone’ is located at a distance of approximately 5 – 6 km from National Highway 48 (Connecting Mumbai – Pune – WACC rate (under-construction/proposed) % 13.00% Bengaluru), 20 – 21 km from Pune CBD (Peth areas), 20 – 21 km from Pune Railway Station and approximately 26 – 27 km * Indicative of pending cost towards base build works and does not include the cost for refurbishments/ from Pune International Airport. infrastructure upgrade works Statement of Based on review of various documents (such as rent roll, lease deeds, Architect’s Certificate, etc.), the Valuer understands Market Value: INR 21,607 Mn Assets (sf): that ‘Embassy TechZone’ is an operational office asset with approximately 2.2 msf of completed leasable area out of which occupancy is approximately 90.6% as on the date of valuation. Further, approximately 3.3 msf is currently under construction/ planning stage. Table below highlights the leasable area for individual blocks that form part of the subject development: Particular Leasable area (sf) Occupancy (%) Completed Blocks 2,160,055 90.6% Under Construction/ Proposed Blocks 3,312,891 NA Total 5,472,946
Source: Rent roll, lease deeds, architect certificate provided by the Client; Location Map
Key Assumptions Particulars Unit Details Construction assumptions Pending cost to complete (overall) INR mn 13,673* Proposed project completion timelines Year FY 2027 Revenue assumptions (as on September 30, 2020) Lease completion Year FY 2027 In-place rent INR psf/mth 49 Marginal rent – IT SEZ office component INR psf/mth 48 Parking rent (Effective) INR / bay/mth 1,500
234 SUMMARY VALUATION REPORT 5.5 Embassy TechZone
Property Name: ‘Embassy TechZone’ is an operational office asset located in Phase 2, Rajiv Gandhi Infotech Park, Hinjewadi, Pune, Maharashtra Property Address: Plot No. 3/A and Plot No. 3/B, Rajiv Gandhi Infotech Park, Hinjewadi, Phase-II, Village Marunji, Taluka Mulshi, District Pune, Maharashtra Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 67.45 acres Brief Description: ‘Embassy TechZone’, has been conceptualized as an office asset spread across a total land area of approximately 67.45 acres. The property is an office asset leased to various tenants and is also well equipped with number of facilities and amenities like food court, amphitheater, intra park shuttles, gymnasium, multilevel car parking, sports ground, etc.
‘Embassy TechZone’ is strategically located in Hinjewadi which is a prominent technology hub of Pune city. ‘Embassy TechZone’ is located at a distance of approximately 5 – 6 km from National Highway 48 (Connecting Mumbai – Pune – Bengaluru), 20 – 21 km from Pune CBD (Peth areas), 20 – 21 km from Pune Railway Station and approximately 26 – 27 km from Pune International Airport. Statement of Based on review of various documents (such as rent roll, lease deeds, Architect’s Certificate, etc.), the Valuer understands Assets (sf): that ‘Embassy TechZone’ is an operational office asset with approximately 2.2 msf of completed leasable area out of which occupancy is approximately 90.6% as on the date of valuation. Further, approximately 3.3 msf is currently under construction/ planning stage. Table below highlights the leasable area for individual blocks that form part of the subject development: Particular Leasable area (sf) Occupancy (%) Completed Blocks 2,160,055 90.6% Under Construction/ Proposed Blocks 3,312,891 NA Total 5,472,946
Source: Rent roll, lease deeds, architect certificate provided by the Client; Location Map
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5.5 Embassy TechZone Key Assumptions Particulars Unit Details Construction assumptions Property Name: ‘Embassy TechZone’ is an operational office asset located in Phase 2, Rajiv Gandhi Infotech Park, Hinjewadi, Pune, Pending cost to complete (overall) INR mn 13,673* Maharashtra Proposed project completion timelines Year FY 2027 Property Address: Plot No. 3/A and Plot No. 3/B, Rajiv Gandhi Infotech Park, Hinjewadi, Phase-II, Village Marunji, Taluka Mulshi, District Revenue assumptions (as on September 30, 2020) Pune, Maharashtra Lease completion Year FY 2027 In-place rent INR psf/mth 49 Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership Marginal rent – IT SEZ office component INR psf/mth 48 of the Client is approximately 67.45 acres Parking rent (Effective) INR / bay/mth 1,500 Brief Description: ‘Embassy TechZone’, has been conceptualized as an office asset spread across a total land area of approximately 67.45 acres. The property is an office asset leased to various tenants and is also well equipped with number of facilities and amenities like Key Assumptions Particulars Unit Details food court, amphitheater, intra park shuttles, gymnasium, multilevel car parking, sports ground, etc. Other financial assumptions Cap rate – commercial components % 8.25% ‘Embassy TechZone’ is strategically located in Hinjewadi which is a prominent technology hub of Pune city. ‘Embassy WACC rate (operational) % 12.03% TechZone’ is located at a distance of approximately 5 – 6 km from National Highway 48 (Connecting Mumbai – Pune – WACC rate (under-construction/proposed) % 13.00% Bengaluru), 20 – 21 km from Pune CBD (Peth areas), 20 – 21 km from Pune Railway Station and approximately 26 – 27 km * Indicative of pending cost towards base build works and does not include the cost for refurbishments/ from Pune International Airport. infrastructure upgrade works Statement of Based on review of various documents (such as rent roll, lease deeds, Architect’s Certificate, etc.), the Valuer understands Market Value: INR 21,607 Mn Assets (sf): that ‘Embassy TechZone’ is an operational office asset with approximately 2.2 msf of completed leasable area out of which occupancy is approximately 90.6% as on the date of valuation. Further, approximately 3.3 msf is currently under construction/ planning stage. Table below highlights the leasable area for individual blocks that form part of the subject development: Particular Leasable area (sf) Occupancy (%) Completed Blocks 2,160,055 90.6% Under Construction/ Proposed Blocks 3,312,891 NA Total 5,472,946
Source: Rent roll, lease deeds, architect certificate provided by the Client; Location Map
Key Assumptions Particulars Unit Details Construction assumptions Pending cost to complete (overall) INR mn 13,673* Proposed project completion timelines Year FY 2027 Revenue assumptions (as on September 30, 2020) Lease completion Year FY 2027 In-place rent INR psf/mth 49 Marginal rent – IT SEZ office component INR psf/mth 48 Parking rent (Effective) INR / bay/mth 1,500
SUMMARY VALUATION REPORT 235 EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5.6 Embassy Quadron Location Map Property Name: ‘Embassy Quadron’ is a Commercial Office Business Park located in Phase 2, Rajiv Gandhi Infotech Park, Hinjewadi, Pune, Maharashtra
Property Address: Plot No. 28, Hinjewadi Phase II, Rajiv Gandhi Infotech Park, Pune, Maharashtra, 411057
Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 25.52 acres
Brief Description: ‘Embassy Quadron’, has been conceptualized as an IT SEZ office development leased to various domestic and multi- national IT/ ITeS tenants. The property is well equipped with number of facilities and amenities like enhanced landscapes, Q café food court, grocery stores, ATMs, indoor sports zone, gymnasium, crèche, two-wheeler and four- wheeler car parking spaces, etc. The property has been constructed in phased manner between 2008 to 2011.
The development currently includes four operational buildings (Q1 to Q4).
Further, ‘Embassy Quadron’ is strategically located in Hinjewadi which is a prominent technology hub of Pune city. ‘Embassy Quadron’ is located at a distance of approximately 7 – 8 km from National Highway 48 (connecting Mumbai – Pune – Bengaluru), 22 – 23 km from Pune CBD (Peth areas), 22 – 23 km from Pune Railway Station and Key Assumptions Particulars Unit Details approximately 26 - 27 km from Pune International Airport. Revenue assumptions (as on September 30, 2020) Lease completion Year FY 2023 Statement of Assets (sf): Based on review of various documents (such as rent roll, Architect’s Certificate, etc.), the Valuer understands that In-place rent INR psf/mth 44^ ‘Embassy Quadron’ is an operational SEZ office asset with approximately 1.9 msf of completed leasable area out of Marginal rent – IT SEZ office component INR psf/mth 48 which occupancy is approximately 77.0% as on the date of valuation. Table below highlights the leasable area for Parking rent (Effective) INR / bay/mth 1,500 individual blocks that form part of the subject development: Other financial assumptions Cap rate – commercial components % 8.25% WACC rate (operational) % 12.03% Particular Leasable area (sf) Occupancy (%) ^denotes the weighted average rental for leased office/retail spaces Completed Blocks 1,894,674 77.0% Market Value: INR 13,104 Mn Under Construction Blocks - NA Proposed Blocks - NA Total 1,894,674 Source: Rent roll, lease deeds, architect certificate provided by the Client;
236 SUMMARY VALUATION REPORT EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5.6 Embassy Quadron Location Map Property Name: ‘Embassy Quadron’ is a Commercial Office Business Park located in Phase 2, Rajiv Gandhi Infotech Park, Hinjewadi, Pune, Maharashtra
Property Address: Plot No. 28, Hinjewadi Phase II, Rajiv Gandhi Infotech Park, Pune, Maharashtra, 411057
Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 25.52 acres
Brief Description: ‘Embassy Quadron’, has been conceptualized as an IT SEZ office development leased to various domestic and multi- national IT/ ITeS tenants. The property is well equipped with number of facilities and amenities like enhanced landscapes, Q café food court, grocery stores, ATMs, indoor sports zone, gymnasium, crèche, two-wheeler and four- wheeler car parking spaces, etc. The property has been constructed in phased manner between 2008 to 2011.
The development currently includes four operational buildings (Q1 to Q4).
Further, ‘Embassy Quadron’ is strategically located in Hinjewadi which is a prominent technology hub of Pune city. ‘Embassy Quadron’ is located at a distance of approximately 7 – 8 km from National Highway 48 (connecting Mumbai – Pune – Bengaluru), 22 – 23 km from Pune CBD (Peth areas), 22 – 23 km from Pune Railway Station and Key Assumptions Particulars Unit Details approximately 26 - 27 km from Pune International Airport. Revenue assumptions (as on September 30, 2020) Lease completion Year FY 2023 Statement of Assets (sf): Based on review of various documents (such as rent roll, Architect’s Certificate, etc.), the Valuer understands that In-place rent INR psf/mth 44^ ‘Embassy Quadron’ is an operational SEZ office asset with approximately 1.9 msf of completed leasable area out of Marginal rent – IT SEZ office component INR psf/mth 48 which occupancy is approximately 77.0% as on the date of valuation. Table below highlights the leasable area for Parking rent (Effective) INR / bay/mth 1,500 individual blocks that form part of the subject development: Other financial assumptions Cap rate – commercial components % 8.25% WACC rate (operational) % 12.03% Particular Leasable area (sf) Occupancy (%) ^denotes the weighted average rental for leased office/retail spaces Completed Blocks 1,894,674 77.0% Market Value: INR 13,104 Mn Under Construction Blocks - NA Proposed Blocks - NA Total 1,894,674 Source: Rent roll, lease deeds, architect certificate provided by the Client;
SUMMARY VALUATION REPORT 237 EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5.7 Embassy Qubix Location Map
Property Name: ‘Embassy Qubix’ is a Commercial Office Business Park located in Phase 1, Rajiv Gandhi Infotech Park, Hinjewadi, Pune, Maharashtra
Property Address: Plot No.2, Blue Ridge Township, Near Rajiv Gandhi Infotech Park – Phase I, Hinjewadi, Pune, Maharashtra 411057
Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 25.16 acres
Brief Description: “Embassy Qubix”, has been conceptualized as an IT SEZ office development leased to various domestic and multi- national technology tenants. The property is well equipped with number of facilities and amenities like enhanced landscapes, Q Court Courtyard, grocery stores, ATMs, two-wheeler and four-wheeler car parking spaces, etc. The property has been constructed in phased manner between 2010 to 2012.
The development currently includes six operational buildings (IT 1 to IT 6).
Further, Embassy Qubix is strategically located in Hinjewadi which is a prominent technology hub of Pune city. Key Particulars Unit Details Embassy Qubix is located at a distance of approximately 3 – 4 km from National Highway 48 (connecting Mumbai Assumptions – Pune – Bengaluru), 18 – 19 km from Pune CBD (Peth areas), 19 – 20 km from Pune Railway Station and Revenue assumptions (as on September 30, 2020) approximately 23 - 24 km from Pune International Airport. Lease completion Year FY 2022 In-place rent INR psf/mth 40^ Statement of Based on review of various documents (such as rent roll, Architect’s Certificate, etc.), the Valuer understands that Marginal rent – IT SEZ office component INR psf/mth 48 Assets (sf): “Embassy Qubix” is an operational SEZ office asset with approximately 1.5 msf of completed leasable area, which Parking rent (Effective) INR / bay/mth 1,500 is 97.6% occupied as on the date of valuation. Table below highlights the leasable area for individual blocks that Other financial assumptions form part of the subject development: Cap rate – commercial components % 8.25% WACC rate (operational) % 12.03% ^denotes the weighted average rental for leased office/retail spaces Particular Leasable Area (sf) Occupancy (%) Completed Blocks 1,450,494 97.6% Market Value: INR 10,153 Mn Under Construction Blocks - NA Proposed Development - NA Total 1,450,494
Source: Rent roll, lease deeds, architect certificate;
238 SUMMARY VALUATION REPORT EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5.7 Embassy Qubix Location Map
Property Name: ‘Embassy Qubix’ is a Commercial Office Business Park located in Phase 1, Rajiv Gandhi Infotech Park, Hinjewadi, Pune, Maharashtra
Property Address: Plot No.2, Blue Ridge Township, Near Rajiv Gandhi Infotech Park – Phase I, Hinjewadi, Pune, Maharashtra 411057
Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 25.16 acres
Brief Description: “Embassy Qubix”, has been conceptualized as an IT SEZ office development leased to various domestic and multi- national technology tenants. The property is well equipped with number of facilities and amenities like enhanced landscapes, Q Court Courtyard, grocery stores, ATMs, two-wheeler and four-wheeler car parking spaces, etc. The property has been constructed in phased manner between 2010 to 2012.
The development currently includes six operational buildings (IT 1 to IT 6).
Further, Embassy Qubix is strategically located in Hinjewadi which is a prominent technology hub of Pune city. Key Particulars Unit Details Embassy Qubix is located at a distance of approximately 3 – 4 km from National Highway 48 (connecting Mumbai Assumptions – Pune – Bengaluru), 18 – 19 km from Pune CBD (Peth areas), 19 – 20 km from Pune Railway Station and Revenue assumptions (as on September 30, 2020) approximately 23 - 24 km from Pune International Airport. Lease completion Year FY 2022 In-place rent INR psf/mth 40^ Statement of Based on review of various documents (such as rent roll, Architect’s Certificate, etc.), the Valuer understands that Marginal rent – IT SEZ office component INR psf/mth 48 Assets (sf): “Embassy Qubix” is an operational SEZ office asset with approximately 1.5 msf of completed leasable area, which Parking rent (Effective) INR / bay/mth 1,500 is 97.6% occupied as on the date of valuation. Table below highlights the leasable area for individual blocks that Other financial assumptions form part of the subject development: Cap rate – commercial components % 8.25% WACC rate (operational) % 12.03% ^denotes the weighted average rental for leased office/retail spaces Particular Leasable Area (sf) Occupancy (%) Completed Blocks 1,450,494 97.6% Market Value: INR 10,153 Mn Under Construction Blocks - NA Proposed Development - NA Total 1,450,494
Source: Rent roll, lease deeds, architect certificate;
SUMMARY VALUATION REPORT 239 EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5.8 Embassy Oxygen Location Map:
Property Name: ‘Embassy Oxygen’ is an operational IT/ ITeS SEZ office development located at Sector 144, Noida, Uttar Pradesh
Property Address:Plot No. – 07, Sector 144, Noida, Uttar Pradesh, India
Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 24.83 Acres
Brief Description:The subject property “Embassy Oxygen” is a partly operational office asset, leased to technology occupiers. The subject property is located at Sector 144, Noida in proximity to Noida – Greater Noida Expressway, which is an emerging commercial / residential vector of Noida. The property is a two side open plot with accessibility via approximately 45 m and 24 m wide roads. The subject property lies in proximity to various office assets such as Candor TechSpace, Assotech Business Cresterra, Advant Navis Business Park, Stellar 135, Express Trade Towers 2, etc.
The subject property is located in close proximity to Noida – Greater Noida Expressway, which makes it easily accessible Key Particulars Unit Details from other regions of NCR (National Capital Region) such as Delhi, Greater Noida, etc. Further, it is located at a distance of Assumptions: approximately 16 – 17 km from the established commercial hub of Noida viz. Sector-18, approximately 16 – 17 km from Construction assumptions DND Flyway and approximately 38 – 39 km from Indira Gandhi International Airport, Delhi Pending cost to complete (overall) INR mn 2,980* Proposed project completion timelines Quarter, Year Q4, FY 2023 Statement of Based on review of various documents (such as architect certificate, rent roll, lease deeds, etc.), the subject property is an (overall) Assets (sf): operational SEZ office asset with approximately 2.5 msf of completed leasable area, out of which occupancy is approximately Revenue assumptions (as on September 30, 2020) 77.7% as on the date of valuation. Table below highlights the leasable area for operational and under construction/ proposed blocks that form part of the subject development: Lease completion Year FY 2024 In-place rent INR psf/mth 48 Marginal rent – IT SEZ office component INR psf/mth 54 Particular Leasable Area (sf) Occupancy (%) Parking rent (Effective) INR / bay/mth - Completed Blocks 2,517,307 77.7% Other financial assumptions Under Construction Blocks 737,000 NA Cap rate % 8.25% Proposed Development NA NA WACC rate (operational) % 12.03% WACC rate (under- Total 3,254,307 % 13.00% construction/proposed) Source: Architect Certificate, Rent roll, lease deeds provided by the Client * Indicative of pending cost towards base build works and does not include the cost for refurbishments/ infrastructure upgrade works
Market Value: INR 21,242 Mn
240 SUMMARY VALUATION REPORT EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5.8 Embassy Oxygen Location Map:
Property Name: ‘Embassy Oxygen’ is an operational IT/ ITeS SEZ office development located at Sector 144, Noida, Uttar Pradesh
Property Address:Plot No. – 07, Sector 144, Noida, Uttar Pradesh, India
Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 24.83 Acres
Brief Description:The subject property “Embassy Oxygen” is a partly operational office asset, leased to technology occupiers. The subject property is located at Sector 144, Noida in proximity to Noida – Greater Noida Expressway, which is an emerging commercial / residential vector of Noida. The property is a two side open plot with accessibility via approximately 45 m and 24 m wide roads. The subject property lies in proximity to various office assets such as Candor TechSpace, Assotech Business Cresterra, Advant Navis Business Park, Stellar 135, Express Trade Towers 2, etc.
The subject property is located in close proximity to Noida – Greater Noida Expressway, which makes it easily accessible Key Particulars Unit Details from other regions of NCR (National Capital Region) such as Delhi, Greater Noida, etc. Further, it is located at a distance of Assumptions: approximately 16 – 17 km from the established commercial hub of Noida viz. Sector-18, approximately 16 – 17 km from Construction assumptions DND Flyway and approximately 38 – 39 km from Indira Gandhi International Airport, Delhi Pending cost to complete (overall) INR mn 2,980* Proposed project completion timelines Quarter, Year Q4, FY 2023 Statement of Based on review of various documents (such as architect certificate, rent roll, lease deeds, etc.), the subject property is an (overall) Assets (sf): operational SEZ office asset with approximately 2.5 msf of completed leasable area, out of which occupancy is approximately Revenue assumptions (as on September 30, 2020) 77.7% as on the date of valuation. Table below highlights the leasable area for operational and under construction/ proposed blocks that form part of the subject development: Lease completion Year FY 2024 In-place rent INR psf/mth 48 Marginal rent – IT SEZ office component INR psf/mth 54 Particular Leasable Area (sf) Occupancy (%) Parking rent (Effective) INR / bay/mth - Completed Blocks 2,517,307 77.7% Other financial assumptions Under Construction Blocks 737,000 NA Cap rate % 8.25% Proposed Development NA NA WACC rate (operational) % 12.03% WACC rate (under- Total 3,254,307 % 13.00% construction/proposed) Source: Architect Certificate, Rent roll, lease deeds provided by the Client * Indicative of pending cost towards base build works and does not include the cost for refurbishments/ infrastructure upgrade works
Market Value: INR 21,242 Mn
SUMMARY VALUATION REPORT 241 5.9 Embassy Galaxy
Property Name: ‘Embassy Galaxy’ is an operational IT/ ITeS office development located at Sector 62, Noida, Uttar Pradesh Property Address: A-44 & 45, Sector 62, Noida, Uttar Pradesh, India – 201309 Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 9.88 Acres Brief The subject property “Embassy Galaxy” is an operational office asset, leased to technology occupiers. The subject property is Description: located at Sector 62, Noida, which is an established commercial vector of Noida. The property is accessible by an internal road of Sector 62 (approximately 45 m wide). The subject property lies in proximity to various office assets such as 3C Green Boulevard, Stellar IT Park, Logix Cyber Park, Candor Techspace, etc. The subject property is located in close proximity to National Highway (NH) – 24, which makes it easily accessible from other regions of NCR (National Capital Region) such as Delhi, Ghaziabad, etc. Further, it is located at a distance of approximately 9 – 10 km from the established commercial hub of Noida viz. Sector-18, approximately 10 – 11 km from DND Flyway and approximately 31 – 32 km from Indira Gandhi International Airport, Delhi Statement of Based on review of various documents (such as architect certificate, rent roll, lease deeds, etc.), the subject property is an Assets (sf): operational office asset with approximately 1.4 msf of completed leasable area, which is approximately 98.9% leased as on the date of valuation. Table below highlights the leasable area details for the subject development:
Particular Leasable Area (sf) Occupancy (%) Completed Blocks 1,357,029 98.9% Under Construction Blocks - NA Proposed Development - NA Total 1,357,029
Source: Architect certificate, Rent roll, lease deeds provided by the Client;
Location Map:
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5.9 Embassy Galaxy Key Assumptions: Particulars Unit Details Property Revenue assumptions (as on September 30, 2020) Name: ‘Embassy Galaxy’ is an operational IT/ ITeS office development located at Sector 62, Noida, Uttar Pradesh Lease completion Year FY 2022
Property In-place rent INR psf/mth 35 Address: A-44 & 45, Sector 62, Noida, Uttar Pradesh, India – 201309 Marginal rent – IT office component INR psf/mth 45 Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of Parking rent (Effective) INR / bay/mth - the Client is approximately 9.88 Acres Other financial assumptions Cap rate % 8.25% Brief The subject property “Embassy Galaxy” is an operational office asset, leased to technology occupiers. The subject property is WACC rate (operational) % 12.03% Description: located at Sector 62, Noida, which is an established commercial vector of Noida. The property is accessible by an internal road of Sector 62 (approximately 45 m wide). The subject property lies in proximity to various office assets such as 3C Green Market Value: INR 8,783 Mn Boulevard, Stellar IT Park, Logix Cyber Park, Candor Techspace, etc. The subject property is located in close proximity to National Highway (NH) – 24, which makes it easily accessible from other regions of NCR (National Capital Region) such as Delhi, Ghaziabad, etc. Further, it is located at a distance of approximately 9 – 10 km from the established commercial hub of Noida viz. Sector-18, approximately 10 – 11 km from DND Flyway and approximately 31 – 32 km from Indira Gandhi International Airport, Delhi Statement of Based on review of various documents (such as architect certificate, rent roll, lease deeds, etc.), the subject property is an Assets (sf): operational office asset with approximately 1.4 msf of completed leasable area, which is approximately 98.9% leased as on the date of valuation. Table below highlights the leasable area details for the subject development:
Particular Leasable Area (sf) Occupancy (%) Completed Blocks 1,357,029 98.9% Under Construction Blocks - NA Proposed Development - NA Total 1,357,029
Source: Architect certificate, Rent roll, lease deeds provided by the Client;
Location Map:
Key Assumptions: Particulars Unit Details Revenue assumptions (as on September 30, 2020) Lease completion Year FY 2022
242 SUMMARY VALUATION REPORT 5.9 Embassy Galaxy
Property Name: ‘Embassy Galaxy’ is an operational IT/ ITeS office development located at Sector 62, Noida, Uttar Pradesh Property Address: A-44 & 45, Sector 62, Noida, Uttar Pradesh, India – 201309 Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 9.88 Acres Brief The subject property “Embassy Galaxy” is an operational office asset, leased to technology occupiers. The subject property is Description: located at Sector 62, Noida, which is an established commercial vector of Noida. The property is accessible by an internal road of Sector 62 (approximately 45 m wide). The subject property lies in proximity to various office assets such as 3C Green Boulevard, Stellar IT Park, Logix Cyber Park, Candor Techspace, etc. The subject property is located in close proximity to National Highway (NH) – 24, which makes it easily accessible from other regions of NCR (National Capital Region) such as Delhi, Ghaziabad, etc. Further, it is located at a distance of approximately 9 – 10 km from the established commercial hub of Noida viz. Sector-18, approximately 10 – 11 km from DND Flyway and approximately 31 – 32 km from Indira Gandhi International Airport, Delhi Statement of Based on review of various documents (such as architect certificate, rent roll, lease deeds, etc.), the subject property is an Assets (sf): operational office asset with approximately 1.4 msf of completed leasable area, which is approximately 98.9% leased as on the date of valuation. Table below highlights the leasable area details for the subject development:
Particular Leasable Area (sf) Occupancy (%) Completed Blocks 1,357,029 98.9% Under Construction Blocks - NA Proposed Development - NA Total 1,357,029
Source: Architect certificate, Rent roll, lease deeds provided by the Client;
Location Map:
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5.9 Embassy Galaxy Key Assumptions: Particulars Unit Details Property Revenue assumptions (as on September 30, 2020) Name: ‘Embassy Galaxy’ is an operational IT/ ITeS office development located at Sector 62, Noida, Uttar Pradesh Lease completion Year FY 2022
Property In-place rent INR psf/mth 35 Address: A-44 & 45, Sector 62, Noida, Uttar Pradesh, India – 201309 Marginal rent – IT office component INR psf/mth 45 Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of Parking rent (Effective) INR / bay/mth - the Client is approximately 9.88 Acres Other financial assumptions Cap rate % 8.25% Brief The subject property “Embassy Galaxy” is an operational office asset, leased to technology occupiers. The subject property is WACC rate (operational) % 12.03% Description: located at Sector 62, Noida, which is an established commercial vector of Noida. The property is accessible by an internal road of Sector 62 (approximately 45 m wide). The subject property lies in proximity to various office assets such as 3C Green Market Value: INR 8,783 Mn Boulevard, Stellar IT Park, Logix Cyber Park, Candor Techspace, etc. The subject property is located in close proximity to National Highway (NH) – 24, which makes it easily accessible from other regions of NCR (National Capital Region) such as Delhi, Ghaziabad, etc. Further, it is located at a distance of approximately 9 – 10 km from the established commercial hub of Noida viz. Sector-18, approximately 10 – 11 km from DND Flyway and approximately 31 – 32 km from Indira Gandhi International Airport, Delhi Statement of Based on review of various documents (such as architect certificate, rent roll, lease deeds, etc.), the subject property is an Assets (sf): operational office asset with approximately 1.4 msf of completed leasable area, which is approximately 98.9% leased as on the date of valuation. Table below highlights the leasable area details for the subject development:
Particular Leasable Area (sf) Occupancy (%) Completed Blocks 1,357,029 98.9% Under Construction Blocks - NA Proposed Development - NA Total 1,357,029
Source: Architect certificate, Rent roll, lease deeds provided by the Client;
Location Map:
Key Assumptions: Particulars Unit Details Revenue assumptions (as on September 30, 2020) Lease completion Year FY 2022
SUMMARY VALUATION REPORT 243 EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5.10 Embassy GolfLinks Location Map
Property Name: Embassy GolfLinks is an office asset located along Intermediate Ring Road, Bengaluru, Karnataka
Property Address: Challaghatta Village, Varthur Hobli, Mahadevapura, Bengaluru East Taluk, Bengaluru, Karnataka
Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 37.11 acres.
Brief The subject property, “Embassy GolfLinks”, is an operational office asset located along Intermediate Ring Road, Bengaluru. This Description: office asset has a total leasable area of approximately 4.5 msf. The interest being valued corresponds to approximately 2.7 msf of office area which forms part of the economic interest of the Client. The larger development also includes an operational hotel (Hilton at Embassy GolfLinks). The immediate surroundings of the subject property comprises of large aggregates of land owned by the Defence Services of the Country Karnataka Golf Association’s operational golf course, Diamond District, DivyaSree Greens, Maruthi Infotech Park, etc. In addition, the subject property is located in proximity to locations such as Indiranagar, Koramangala etc., which are considered as established residential and commercial locations within the city.
The subject property is located at a distance of approximately <1 km from the Domlur flyover, 1 – 2 km from Indiranagar, 2-3 km from Koramangala, 7-8 km from MG Road and approximately 43 - 45 km from Bengaluru International Airport.
Statement of Based on review of various documents (such as rent roll, Architect’s Certificate, etc.), the subject property is an operational Assets (sf): office asset with approximately 2.7 msf of completed leasable area and is 98.6% occupied as on the date of valuation. Table below highlights the leasable area for subject property that form part of the subject development:
Particular Leasable Area (sf) Occupancy (%) Completed Blocks 2,737,442 98.6% Key Assumptions Particulars Unit Details Under Construction Blocks - NA Revenue assumptions (as on September 30, 2020) Proposed Development - NA In-place rent INR psf pm 116 Marginal rent – office component INR psf pm 148 Total 2,737,442 Parking rent (Effective) INR / bay/mth 4,500 Other financial assumptions Source: Source: Rent roll, lease deeds, architect certificate provided by the Client Cap rate – commercial components % 8.00% WACC rate % 12.03%
Market Value: INR 54,856 Mn
Note: 1. The valuation presented is for 100% interest in the asset. However, based on inputs provided by the Client, the REIT hold 50% of the interests in the asset (viz. INR 27,428 Mn) 2. The above valuation excludes valuation of Hilton at Embassy GolfLinks. The valuation of Hilton at Embassy GolfLinks is presented in section 5.12
244 SUMMARY VALUATION REPORT EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5.10 Embassy GolfLinks Location Map
Property Name: Embassy GolfLinks is an office asset located along Intermediate Ring Road, Bengaluru, Karnataka
Property Address: Challaghatta Village, Varthur Hobli, Mahadevapura, Bengaluru East Taluk, Bengaluru, Karnataka
Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 37.11 acres.
Brief The subject property, “Embassy GolfLinks”, is an operational office asset located along Intermediate Ring Road, Bengaluru. This Description: office asset has a total leasable area of approximately 4.5 msf. The interest being valued corresponds to approximately 2.7 msf of office area which forms part of the economic interest of the Client. The larger development also includes an operational hotel (Hilton at Embassy GolfLinks). The immediate surroundings of the subject property comprises of large aggregates of land owned by the Defence Services of the Country Karnataka Golf Association’s operational golf course, Diamond District, DivyaSree Greens, Maruthi Infotech Park, etc. In addition, the subject property is located in proximity to locations such as Indiranagar, Koramangala etc., which are considered as established residential and commercial locations within the city.
The subject property is located at a distance of approximately <1 km from the Domlur flyover, 1 – 2 km from Indiranagar, 2-3 km from Koramangala, 7-8 km from MG Road and approximately 43 - 45 km from Bengaluru International Airport.
Statement of Based on review of various documents (such as rent roll, Architect’s Certificate, etc.), the subject property is an operational Assets (sf): office asset with approximately 2.7 msf of completed leasable area and is 98.6% occupied as on the date of valuation. Table below highlights the leasable area for subject property that form part of the subject development:
Particular Leasable Area (sf) Occupancy (%) Completed Blocks 2,737,442 98.6% Key Assumptions Particulars Unit Details Under Construction Blocks - NA Revenue assumptions (as on September 30, 2020) Proposed Development - NA In-place rent INR psf pm 116 Marginal rent – office component INR psf pm 148 Total 2,737,442 Parking rent (Effective) INR / bay/mth 4,500 Other financial assumptions Source: Source: Rent roll, lease deeds, architect certificate provided by the Client Cap rate – commercial components % 8.00% WACC rate % 12.03%
Market Value: INR 54,856 Mn
Note: 1. The valuation presented is for 100% interest in the asset. However, based on inputs provided by the Client, the REIT hold 50% of the interests in the asset (viz. INR 27,428 Mn) 2. The above valuation excludes valuation of Hilton at Embassy GolfLinks. The valuation of Hilton at Embassy GolfLinks is presented in section 5.12
SUMMARY VALUATION REPORT 245 EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5.11 Embassy One Location Map Property Name: ‘Embassy One’ is a premium mixed-used development (High-end office, retail and hospitality components) located along, Bellary Road, Ganga Nagar, Bengaluru, Karnataka
Property Address: Bellary Road, Ganga Nagar, Bengaluru, Karnataka
Land Area: Based on review of the title report, the Valuer understand that the total land area of the subject property under the ownership of the Client is approximately 5.62 acres (which includes residential component). The interest being valued as part of this assessment is an undivided share of 3.19 acres (for the office, retail and hospitality components).
Brief Description: The subject property is a premium mixed-used development comprising of commercial, retail and hospitality components. Subject property is located in a premium location in close proximity to the CBD, approximately 6-7 km from MG Road. The stretch between the CBD and Mekhri Circle is recognized as a premium residential and hospitality hub of Bengaluru. Subject location lies in close proximity to premium residential colonies of Sheshadripuram, Sadashiva Nagar, Dollars colony, Fraser Town, Jayamahal, etc., which house affluent population of businessmen community, ministers, etc. Further, the location is considered an established hub for premium hotels, housing prominent 5 star hotels such as Windsor Manor, Lalit Ashok, & Taj Westend. As per information provided by the client, the Valuer understands that 5.5% of total area is leased as of date of valuation.
The subject property’s location along the initial stretch of Bellary Road further adds to the attractiveness of the development. Bellary Road connects the city centre to the airport and also provides connectivity to all major hubs within Bengaluru City. Further, the subject property’s proximity to the Hebbal Outer Ring Road, connects the subject location to prominent locations such as Yeshwanthpur, KR Puram, Whitefield, Sarjapur Outer ring road, Old Madras road, etc. Further, it is located at a distance of 1-2 km from Mekhri Circle, 3-4 km from Hebbal ORR Junction, 6-7 km from MG Road, 27-28 K from Bengaluru International Airport. Key Assumptions Particulars Unit Details Statement of Assets Table below highlights the leasable area for individual blocks that form part of the subject development: Revenue assumptions (as on September 30, 2020) (sf): Block No of Keys/ Leasable Area (sf) Lease completion Year Q3, FY 2024 Office 194,948 In-place rent INR psf/mth 156 Retail 55,148 Marginal rent – Non IT office component INR psf/mth 147* Hotel (Four Seasons at Embassy One) 230 keys Marginal rent – Retail component INR psf/mth 170 Total 230 keys / 250,096 Parking rent (Effective) INR / bay/mth - ARR – Four Seasons at Embassy One INR / room / day 10,500 Source: Architect certificate provided by the Client Stabilized Occupancy – Four Seasons at Embassy One % 70% Other financial assumptions Cap rate – commercial components % 7.50% 7.14% Cap rate – hotel components % (viz. an EV-EBITDA multiple of 14) WACC rate (operational) % 12.03% WACC rate (hotel) % 12.63% * Inclusive of car park rent
Market Value: INR 12,077 Mn
246 SUMMARY VALUATION REPORT EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5.11 Embassy One Location Map Property Name: ‘Embassy One’ is a premium mixed-used development (High-end office, retail and hospitality components) located along, Bellary Road, Ganga Nagar, Bengaluru, Karnataka
Property Address: Bellary Road, Ganga Nagar, Bengaluru, Karnataka
Land Area: Based on review of the title report, the Valuer understand that the total land area of the subject property under the ownership of the Client is approximately 5.62 acres (which includes residential component). The interest being valued as part of this assessment is an undivided share of 3.19 acres (for the office, retail and hospitality components).
Brief Description: The subject property is a premium mixed-used development comprising of commercial, retail and hospitality components. Subject property is located in a premium location in close proximity to the CBD, approximately 6-7 km from MG Road. The stretch between the CBD and Mekhri Circle is recognized as a premium residential and hospitality hub of Bengaluru. Subject location lies in close proximity to premium residential colonies of Sheshadripuram, Sadashiva Nagar, Dollars colony, Fraser Town, Jayamahal, etc., which house affluent population of businessmen community, ministers, etc. Further, the location is considered an established hub for premium hotels, housing prominent 5 star hotels such as Windsor Manor, Lalit Ashok, & Taj Westend. As per information provided by the client, the Valuer understands that 5.5% of total area is leased as of date of valuation.
The subject property’s location along the initial stretch of Bellary Road further adds to the attractiveness of the development. Bellary Road connects the city centre to the airport and also provides connectivity to all major hubs within Bengaluru City. Further, the subject property’s proximity to the Hebbal Outer Ring Road, connects the subject location to prominent locations such as Yeshwanthpur, KR Puram, Whitefield, Sarjapur Outer ring road, Old Madras road, etc. Further, it is located at a distance of 1-2 km from Mekhri Circle, 3-4 km from Hebbal ORR Junction, 6-7 km from MG Road, 27-28 K from Bengaluru International Airport. Key Assumptions Particulars Unit Details Statement of Assets Table below highlights the leasable area for individual blocks that form part of the subject development: Revenue assumptions (as on September 30, 2020) (sf): Block No of Keys/ Leasable Area (sf) Lease completion Year Q3, FY 2024 Office 194,948 In-place rent INR psf/mth 156 Retail 55,148 Marginal rent – Non IT office component INR psf/mth 147* Hotel (Four Seasons at Embassy One) 230 keys Marginal rent – Retail component INR psf/mth 170 Total 230 keys / 250,096 Parking rent (Effective) INR / bay/mth - ARR – Four Seasons at Embassy One INR / room / day 10,500 Source: Architect certificate provided by the Client Stabilized Occupancy – Four Seasons at Embassy One % 70% Other financial assumptions Cap rate – commercial components % 7.50% 7.14% Cap rate – hotel components % (viz. an EV-EBITDA multiple of 14) WACC rate (operational) % 12.03% WACC rate (hotel) % 12.63% * Inclusive of car park rent
Market Value: INR 12,077 Mn
SUMMARY VALUATION REPORT 247 5.12 Hilton at Embassy GolfLinks
Property Name: Hilton at Embassy GolfLinks is an operational hospitality development as part of a larger office asset ‘Embassy GolfLinks’ located along Intermediate Ring Road, Bengaluru, Karnataka Property Address: Challaghatta Village, Varthur Hobli, Bengaluru East Taluk, Bengaluru, Karnataka Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 3.58 acres Brief Description: The subject property, Hilton at Embassy GolfLinks, is an operational hospitality development located along Intermediate Ring Road, Bengaluru. The interest being valued corresponds to a developed area of 448,156 sf of hotel with 247 keys (operational since March 2014 and operated by Hilton). The immediate surroundings of the subject property comprise of large aggregates of land owned by the Defence Services of the Country Karnataka Golf Association’s operational golf course, Diamond District, DivyaSree Greens, Maruthi Infotech Park, etc. In addition, the subject property is located in proximity to locations such as Indiranagar, Koramangala etc., which are considered as established residential and commercial locations within the city. In addition to the subject property, the micro-market also comprises of other hotels such as The Leela, Taj Vivanta, Hyatt, The Paul, Ramada Encore, etc. The subject property is located at a distance of approximately <1 km from the Domlur flyover, 1 – 2 km from Indiranagar, 2-3 km from Koramangala, 7-8 km from MG Road and approximately 43 - 45 km from Bengaluru International Airport. Statement of Based on the information provided by the client, the subject property is an operational hospitality development. Table Assets (sf): below highlights the total operational area of the subject development:
Property No of Keys 247 keys Hotel (Hilton at Embassy GolfLinks) (developed area - 448,156 sf)
Source: Architect certificate provided by the Client Location Map
EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5.12 Hilton at Embassy GolfLinks Particulars Unit Details Key Assumptions Revenue assumptions (as on September 30, 2020) Property Name: Hilton at Embassy GolfLinks is an operational hospitality development as part of a larger office asset ‘Embassy GolfLinks’ ARR – Hilton at Embassy GolfLinks INR / room / day 9,000 located along Intermediate Ring Road, Bengaluru, Karnataka Stabilized Occupancy – Hilton at Embassy GolfLinks % 72 Property Address: Challaghatta Village, Varthur Hobli, Bengaluru East Taluk, Bengaluru, Karnataka Other financial assumptions Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the 7.14% Cap rate – hotel components % ownership of the Client is approximately 3.58 acres (viz. an EV-EBITDA multiple of 14) Brief Description: The subject property, Hilton at Embassy GolfLinks, is an operational hospitality development located along Intermediate Ring WACC rate % 12.63% Road, Bengaluru. The interest being valued corresponds to a developed area of 448,156 sf of hotel with 247 keys (operational since March 2014 and operated by Hilton). The immediate surroundings of the subject property comprise of large aggregates of Market Value: INR 4,375 Mn land owned by the Defence Services of the Country Karnataka Golf Association’s operational golf course, Diamond District, DivyaSree Greens, Maruthi Infotech Park, etc. In addition, the subject property is located in proximity to locations such as Indiranagar, Koramangala etc., which are considered as established residential and commercial locations within the city. In addition to the subject property, the micro-market also comprises of other hotels such as The Leela, Taj Vivanta, Hyatt, The Paul, Ramada Encore, etc. The subject property is located at a distance of approximately <1 km from the Domlur flyover, 1 – 2 km from Indiranagar, 2-3 km from Koramangala, 7-8 km from MG Road and approximately 43 - 45 km from Bengaluru International Airport. Statement of Based on the information provided by the client, the subject property is an operational hospitality development. Table Assets (sf): below highlights the total operational area of the subject development:
Property No of Keys 247 keys Hotel (Hilton at Embassy GolfLinks) (developed area - 448,156 sf)
Source: Architect certificate provided by the Client Location Map
Particulars Unit Details Key Assumptions Revenue assumptions (as on September 30, 2020) ARR – Hilton at Embassy GolfLinks INR / room / day 9,000
248 SUMMARY VALUATION REPORT 5.12 Hilton at Embassy GolfLinks
Property Name: Hilton at Embassy GolfLinks is an operational hospitality development as part of a larger office asset ‘Embassy GolfLinks’ located along Intermediate Ring Road, Bengaluru, Karnataka Property Address: Challaghatta Village, Varthur Hobli, Bengaluru East Taluk, Bengaluru, Karnataka Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the ownership of the Client is approximately 3.58 acres Brief Description: The subject property, Hilton at Embassy GolfLinks, is an operational hospitality development located along Intermediate Ring Road, Bengaluru. The interest being valued corresponds to a developed area of 448,156 sf of hotel with 247 keys (operational since March 2014 and operated by Hilton). The immediate surroundings of the subject property comprise of large aggregates of land owned by the Defence Services of the Country Karnataka Golf Association’s operational golf course, Diamond District, DivyaSree Greens, Maruthi Infotech Park, etc. In addition, the subject property is located in proximity to locations such as Indiranagar, Koramangala etc., which are considered as established residential and commercial locations within the city. In addition to the subject property, the micro-market also comprises of other hotels such as The Leela, Taj Vivanta, Hyatt, The Paul, Ramada Encore, etc. The subject property is located at a distance of approximately <1 km from the Domlur flyover, 1 – 2 km from Indiranagar, 2-3 km from Koramangala, 7-8 km from MG Road and approximately 43 - 45 km from Bengaluru International Airport. Statement of Based on the information provided by the client, the subject property is an operational hospitality development. Table Assets (sf): below highlights the total operational area of the subject development:
Property No of Keys 247 keys Hotel (Hilton at Embassy GolfLinks) (developed area - 448,156 sf)
Source: Architect certificate provided by the Client Location Map
EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT
5.12 Hilton at Embassy GolfLinks Particulars Unit Details Key Assumptions Revenue assumptions (as on September 30, 2020) Property Name: Hilton at Embassy GolfLinks is an operational hospitality development as part of a larger office asset ‘Embassy GolfLinks’ ARR – Hilton at Embassy GolfLinks INR / room / day 9,000 located along Intermediate Ring Road, Bengaluru, Karnataka Stabilized Occupancy – Hilton at Embassy GolfLinks % 72 Property Address: Challaghatta Village, Varthur Hobli, Bengaluru East Taluk, Bengaluru, Karnataka Other financial assumptions Land Area: Based on review of the title report, the Valuer understands that the total land area of the subject property under the 7.14% Cap rate – hotel components % ownership of the Client is approximately 3.58 acres (viz. an EV-EBITDA multiple of 14) Brief Description: The subject property, Hilton at Embassy GolfLinks, is an operational hospitality development located along Intermediate Ring WACC rate % 12.63% Road, Bengaluru. The interest being valued corresponds to a developed area of 448,156 sf of hotel with 247 keys (operational since March 2014 and operated by Hilton). The immediate surroundings of the subject property comprise of large aggregates of Market Value: INR 4,375 Mn land owned by the Defence Services of the Country Karnataka Golf Association’s operational golf course, Diamond District, DivyaSree Greens, Maruthi Infotech Park, etc. In addition, the subject property is located in proximity to locations such as Indiranagar, Koramangala etc., which are considered as established residential and commercial locations within the city. In addition to the subject property, the micro-market also comprises of other hotels such as The Leela, Taj Vivanta, Hyatt, The Paul, Ramada Encore, etc. The subject property is located at a distance of approximately <1 km from the Domlur flyover, 1 – 2 km from Indiranagar, 2-3 km from Koramangala, 7-8 km from MG Road and approximately 43 - 45 km from Bengaluru International Airport. Statement of Based on the information provided by the client, the subject property is an operational hospitality development. Table Assets (sf): below highlights the total operational area of the subject development:
Property No of Keys 247 keys Hotel (Hilton at Embassy GolfLinks) (developed area - 448,156 sf)
Source: Architect certificate provided by the Client Location Map
Particulars Unit Details Key Assumptions Revenue assumptions (as on September 30, 2020) ARR – Hilton at Embassy GolfLinks INR / room / day 9,000
SUMMARY VALUATION REPORT 249 5.13 Embassy Energy
Property Name: ‘Embassy Energy’ is a Solar PV electricity generation facility spread across Villages Ittigi, Mooregeri and Nellukudure, Bellary District, Karnataka
Property Villages Ittigi and Mooregeri in Huvin Hadagali Taluka and Nellukudure in Hagri Bommanhalli Taluka, Bellary District, Address: Karnataka
Land Area: The Valuer understands from the Client, title reports, site plans, letter highlighting Commercial Operations Date and site visit, that the park is spread over 465.77 Acres of which the land aggregation is in place by way of sale deed, Agreement to Sell (ATS) or General Power of Attorney (GPA), etc. The Valuer understands that currently only about 254.47 Acres is owned by the company by way of Sale Deed whereas the rest is under various stages of sale and conversion – below is a table which highlights the current status of the Land Aggregation. Further, the Valuer understands that physical possession of the land is with EEPL and/or its contractors and sub-contractors and that the solar park has been constructed on most of the land. It is assumed that the sale and conversion would be successful and any adverse impact has not been factored in the valuation
Particular Area (acres) Total extent of identified Land 465.77 Registered ATS and POA completed 465.77 Applied for approval u/s 109 464.51 Extent of land approved/recommended by DC u/s 109 442.54 Final approval received u/s 109 442.54 Sale Deed executed favouring EEPL 254.47
Brief The subject property is an operational solar park under the ownership of ‘Embassy-Energy Private Limited (EEPL)’. The Description: subject site is spread across three villages namely Ittigi, Mooregeri and Nellukudure in Bellary District. The subject location is situated at a distance of more than 300 km from Bengaluru City and is currently a nascent vector in terms of real estate activity. Being a peripheral location, the region is predominantly characterized by the presence of agricultural land parcels (with black cotton soil). However, a few solar parks are currently operational/ proposed at the subject location by prominent players such as Adani, ReNew, etc. The accessibility of the subject region is via State Highway – 45 (SH – 45).
On account of being accessible through the State Highway – 45 (SH – 45), the subject property enjoys good connectivity to neighbouring towns and villages. Further, it is located at a distance of approximately 3 – 4 km from the 220 KV Sub-station (Ittigi), approximately 3 – 4 km from Ittigi Village Centre, approximately 65 – 70 km from Davangere and approximately 300 – 310 km from MG Road (Bengaluru).
Based on review of power purchase agreements between EEPL and the power purchasers, the Valuer understands that the solar plant would supply electricity to the existing office parks / hotels of Embassy in Bengaluru. In lieu of the same, it is understood that EEPL has already signed power purchase agreements (PPAs) for 25 years with various entities for commercial and industrial category.
Further, based on the review of various documents provided by the Client, it is understood that EEPL has entered into a project development agreement with IL&FS Solar Power Limited, as per which IL&FS Solar Power Limited would set up the entire solar plant facility including land acquisition, development, design, engineering, procurement, construction, erection, testing and commissioning of the solar park. For the same, IL&FS Solar Power Limited will receive deferred payments from EEPL in equated monthly instalments for 15 years (180 months) from Commercial Operation Date (COD). Additionally, it is also understood that IL&FS Solar Power Limited would undertake the O&M services for the solar park facility for a period of 15 EMBASSY OFFICE PARKS MANAGEMENT SERVICES PRIVATE LIMITED | EMBASSY OFFICE PARKS REIT years from COD. For the same, EEPL would pay a lump sum operations and maintenance service fee (during the term of this agreement) to IL&FS Solar Power Limited.
5.13 Embassy Energy Statement of Based on review of various documents (such as deferred payment agreement, project development agreement, commissioning Assets: certificates, Government Order, etc.), the solar park has an installed capacity of approximately 130 Mega Watts (MW) DC (output will be 100 MW AC), capable of generating at least 215 Million Units (MU) of electricity by the end of the first 12 Property Name: ‘Embassy Energy’ is a Solar PV electricity generation facility spread across Villages Ittigi, Mooregeri and Nellukudure, Bellary months from the date on which it achieves COD and subject to plant stabilization. Table below highlights the details for the District, Karnataka subject plant: Particular Detail Property Villages Ittigi and Mooregeri in Huvin Hadagali Taluka and Nellukudure in Hagri Bommanhalli Taluka, Bellary District, Capacity (MW) (A) 130 MW DC (100 MW AC) Address: Karnataka Plant Load Factor (%) (B) 18.88% Land Area: The Valuer understands from the Client, title reports, site plans, letter highlighting Commercial Operations Date and site visit, that the park is spread over 465.77 Acres of which the land aggregation is in place by way of sale deed, Agreement to Sell Number of hours in a day (C) 24 (ATS) or General Power of Attorney (GPA), etc. The Valuer understands that currently only about 254.47 Acres is owned by the Days in a year (D) 365 company by way of Sale Deed whereas the rest is under various stages of sale and conversion – below is a table which Total units generated (kWH) (A * B * C * D) * 1000 215 Million Units (MU)* in kWH in Year 1 highlights the current status of the Land Aggregation. Further, the Valuer understands that physical possession of the land is Source: Various documents/ inputs provided by the Client; * Subject to plant stabilization, however, considering the past with EEPL and/or its contractors and sub-contractors and that the solar park has been constructed on most of the land. It is performance of the subject plant, the maximum generation has been capped at approx. 200 Million Units (MU) for any given assumed that the sale and conversion would be successful and any adverse impact has not been factored in the valuation year
Particular Area (acres) As per the PPAs executed with various entities, the purchasers have agreed to purchase at least 85% of the contracted quantity Total extent of identified Land 465.77 (‘minimum guaranteed offtake’) each tariff year, commencing from the commercial operation date until the end of the term. Registered ATS and POA completed 465.77 Key Particulars Unit Details Applied for approval u/s 109 464.51 Assumptions: Development Timelines Extent of land approved/recommended by DC u/s 109 442.54 COD Date 28th February 2018* Final approval received u/s 109 442.54 Revenue assumptions (as on September 30, 2020) Sale Deed executed favouring EEPL 254.47 BESCOM Tariff – Commercial INR per kWH 9.00 BESCOM Tariff – Industrial INR per kWH 7.40 Brief The subject property is an operational solar park under the ownership of ‘Embassy-Energy Private Limited (EEPL)’. The Blended Tariff INR per kWH 8.76** Description: subject site is spread across three villages namely Ittigi, Mooregeri and Nellukudure in Bellary District. The subject location is Other financial assumptions situated at a distance of more than 300 km from Bengaluru City and is currently a nascent vector in terms of real estate activity. Useful Life Years 25 years Being a peripheral location, the region is predominantly characterized by the presence of agricultural land parcels (with black Cost of Equity % 13.50% cotton soil). However, a few solar parks are currently operational/ proposed at the subject location by prominent players such as * 40% commenced operations on 23rd January 2018 and balance 60% on 28th February 2018 Adani, ReNew, etc. The accessibility of the subject region is via State Highway – 45 (SH – 45). ** In proportion of the distribution between commercial and industrial category consumers
Market INR 10,002 Mn On account of being accessible through the State Highway – 45 (SH – 45), the subject property enjoys good connectivity to Value: neighbouring towns and villages. Further, it is located at a distance of approximately 3 – 4 km from the 220 KV Sub-station (Ittigi), approximately 3 – 4 km from Ittigi Village Centre, approximately 65 – 70 km from Davangere and approximately 300 – 310 km from MG Road (Bengaluru).
Based on review of power purchase agreements between EEPL and the power purchasers, the Valuer understands that the solar plant would supply electricity to the existing office parks / hotels of Embassy in Bengaluru. In lieu of the same, it is understood that EEPL has already signed power purchase agreements (PPAs) for 25 years with various entities for commercial and industrial category.
Further, based on the review of various documents provided by the Client, it is understood that EEPL has entered into a project development agreement with IL&FS Solar Power Limited, as per which IL&FS Solar Power Limited would set up the entire solar plant facility including land acquisition, development, design, engineering, procurement, construction, erection, testing and commissioning of the solar park. For the same, IL&FS Solar Power Limited will receive deferred payments from EEPL in equated monthly instalments for 15 years (180 months) from Commercial Operation Date (COD). Additionally, it is also understood that IL&FS Solar Power Limited would undertake the O&M services for the solar park facility for a period of 15 years from COD. For the same, EEPL would pay a lump sum operations and maintenance service fee (during the term of this agreement) to IL&FS Solar Power Limited.
Statement of Based on review of various documents (such as deferred payment agreement, project development agreement, commissioning Assets: certificates, Government Order, etc.), the solar park has an installed capacity of approximately 130 Mega Watts (MW) DC (output will be 100 MW AC), capable of generating at least 215 Million Units (MU) of electricity by the end of the first 12 months from the date on which it achieves COD and subject to plant stabilization. Table below highlights the details for the subject plant: Particular Detail Capacity (MW) (A) 130 MW DC (100 MW AC) Plant Load Factor (%) (B) 18.88%
250 SUMMARY VALUATION REPORT 5.13 Embassy Energy
Property Name: ‘Embassy Energy’ is a Solar PV electricity generation facility spread across Villages Ittigi, Mooregeri and Nellukudure, Bellary District, Karnataka
Property Villages Ittigi and Mooregeri in Huvin Hadagali Taluka and Nellukudure in Hagri Bommanhalli Taluka, Bellary District, Address: Karnataka
Land Area: The Valuer understands from the Client, title reports, site plans, letter highlighting Commercial Operations Date and site visit, that the park is spread over 465.77 Acres of which the land aggregation is in place by way of sale deed, Agreement to Sell (ATS) or General Power of Attorney (GPA), etc. The Valuer understands that currently only about 254.47 Acres is owned by the company by way of Sale Deed whereas the rest is under various stages of sale and conversion – below is a table which highlights the current status of the Land Aggregation. Further, the Valuer understands that physical possession of the land is with EEPL and/or its contractors and sub-contractors and that the solar park has been constructed on most of the land. It is assumed that the sale and conversion would be successful and any adverse impact has not been factored in the valuation
Particular Area (acres) Total extent of identified Land 465.77 Registered ATS and POA completed 465.77 Applied for approval u/s 109 464.51 Extent of land approved/recommended by DC u/s 109 442.54 Final approval received u/s 109 442.54 Sale Deed executed favouring EEPL 254.47
Brief The subject property is an operational solar park under the ownership of ‘Embassy-Energy Private Limited (EEPL)’. The Description: subject site is spread across three villages namely Ittigi, Mooregeri and Nellukudure in Bellary District. The subject location is situated at a distance of more than 300 km from Bengaluru City and is currently a nascent vector in terms of real estate activity. Being a peripheral location, the region is predominantly characterized by the presence of agricultural land parcels (with black cotton soil). However, a few solar parks are currently operational/ proposed at the subject location by prominent players such as Adani, ReNew, etc. The accessibility of the subject region is via State Highway – 45 (SH – 45).
On account of being accessible through the State Highway – 45 (SH – 45), the subject property enjoys good connectivity to neighbouring towns and villages. Further, it is located at a distance of approximately 3 – 4 km from the 220 KV Sub-station (Ittigi), approximately 3 – 4 km from Ittigi Village Centre, approximately 65 – 70 km from Davangere and approximately 300 – 310 km from MG Road (Bengaluru).
Based on review of power purchase agreements between EEPL and the power purchasers, the Valuer understands that the solar plant would supply electricity to the existing office parks / hotels of Embassy in Bengaluru. In lieu of the same, it is understood that EEPL has already signed power purchase agreements (PPAs) for 25 years with various entities for commercial and industrial category.
Further, based on the review of various documents provided by the Client, it is understood that EEPL has entered into a project development agreement with IL&FS Solar Power Limited, as per which IL&FS Solar Power Limited would set up the entire solar plant facility including land acquisition, development, design, engineering, procurement, construction, erection, testing and commissioning of the solar park. For the same, IL&FS Solar Power Limited will receive deferred payments from EEPL in equated monthly instalments for 15 years (180 months) from Commercial Operation Date (COD). Additionally, it is also understood that IL&FS Solar Power Limited would undertake the O&M services for the solar park facility for a period of 15 EMBASSYyears from OFFICECOD. For PARKS the same, MANAGEMENT EEPL would pay SERVICES a lump sum PRIVATE operations LIMITED and maintenance | EMBASSY service OFFICE fee PARKS(during REITthe term of this agreement) to IL&FS Solar Power Limited.
5.13 Embassy Energy Statement of Based on review of various documents (such as deferred payment agreement, project development agreement, commissioning Assets: certificates, Government Order, etc.), the solar park has an installed capacity of approximately 130 Mega Watts (MW) DC (output will be 100 MW AC), capable of generating at least 215 Million Units (MU) of electricity by the end of the first 12 Property Name: ‘Embassy Energy’ is a Solar PV electricity generation facility spread across Villages Ittigi, Mooregeri and Nellukudure, Bellary months from the date on which it achieves COD and subject to plant stabilization. Table below highlights the details for the District, Karnataka subject plant: Particular Detail Property Villages Ittigi and Mooregeri in Huvin Hadagali Taluka and Nellukudure in Hagri Bommanhalli Taluka, Bellary District, Capacity (MW) (A) 130 MW DC (100 MW AC) Address: Karnataka Plant Load Factor (%) (B) 18.88% Land Area: The Valuer understands from the Client, title reports, site plans, letter highlighting Commercial Operations Date and site visit, that the park is spread over 465.77 Acres of which the land aggregation is in place by way of sale deed, Agreement to Sell Number of hours in a day (C) 24 (ATS) or General Power of Attorney (GPA), etc. The Valuer understands that currently only about 254.47 Acres is owned by the Days in a year (D) 365 company by way of Sale Deed whereas the rest is under various stages of sale and conversion – below is a table which Total units generated (kWH) (A * B * C * D) * 1000 215 Million Units (MU)* in kWH in Year 1 highlights the current status of the Land Aggregation. Further, the Valuer understands that physical possession of the land is Source: Various documents/ inputs provided by the Client; * Subject to plant stabilization, however, considering the past with EEPL and/or its contractors and sub-contractors and that the solar park has been constructed on most of the land. It is performance of the subject plant, the maximum generation has been capped at approx. 200 Million Units (MU) for any given assumed that the sale and conversion would be successful and any adverse impact has not been factored in the valuation year
Particular Area (acres) As per the PPAs executed with various entities, the purchasers have agreed to purchase at least 85% of the contracted quantity Total extent of identified Land 465.77 (‘minimum guaranteed offtake’) each tariff year, commencing from the commercial operation date until the end of the term. Registered ATS and POA completed 465.77 Key Particulars Unit Details Applied for approval u/s 109 464.51 Assumptions: Development Timelines Extent of land approved/recommended by DC u/s 109 442.54 COD Date 28th February 2018* Final approval received u/s 109 442.54 Revenue assumptions (as on September 30, 2020) Sale Deed executed favouring EEPL 254.47 BESCOM Tariff – Commercial INR per kWH 9.00 BESCOM Tariff – Industrial INR per kWH 7.40 Brief The subject property is an operational solar park under the ownership of ‘Embassy-Energy Private Limited (EEPL)’. The Blended Tariff INR per kWH 8.76** Description: subject site is spread across three villages namely Ittigi, Mooregeri and Nellukudure in Bellary District. The subject location is Other financial assumptions situated at a distance of more than 300 km from Bengaluru City and is currently a nascent vector in terms of real estate activity. Useful Life Years 25 years Being a peripheral location, the region is predominantly characterized by the presence of agricultural land parcels (with black Cost of Equity % 13.50% cotton soil). However, a few solar parks are currently operational/ proposed at the subject location by prominent players such as * 40% commenced operations on 23rd January 2018 and balance 60% on 28th February 2018 Adani, ReNew, etc. The accessibility of the subject region is via State Highway – 45 (SH – 45). ** In proportion of the distribution between commercial and industrial category consumers
Market INR 10,002 Mn On account of being accessible through the State Highway – 45 (SH – 45), the subject property enjoys good connectivity to Value: neighbouring towns and villages. Further, it is located at a distance of approximately 3 – 4 km from the 220 KV Sub-station (Ittigi), approximately 3 – 4 km from Ittigi Village Centre, approximately 65 – 70 km from Davangere and approximately 300 – 310 km from MG Road (Bengaluru).
Based on review of power purchase agreements between EEPL and the power purchasers, the Valuer understands that the solar plant would supply electricity to the existing office parks / hotels of Embassy in Bengaluru. In lieu of the same, it is understood that EEPL has already signed power purchase agreements (PPAs) for 25 years with various entities for commercial and industrial category.
Further, based on the review of various documents provided by the Client, it is understood that EEPL has entered into a project development agreement with IL&FS Solar Power Limited, as per which IL&FS Solar Power Limited would set up the entire solar plant facility including land acquisition, development, design, engineering, procurement, construction, erection, testing and commissioning of the solar park. For the same, IL&FS Solar Power Limited will receive deferred payments from EEPL in equated monthly instalments for 15 years (180 months) from Commercial Operation Date (COD). Additionally, it is also understood that IL&FS Solar Power Limited would undertake the O&M services for the solar park facility for a period of 15 years from COD. For the same, EEPL would pay a lump sum operations and maintenance service fee (during the term of this agreement) to IL&FS Solar Power Limited.
Statement of Based on review of various documents (such as deferred payment agreement, project development agreement, commissioning Assets: certificates, Government Order, etc.), the solar park has an installed capacity of approximately 130 Mega Watts (MW) DC (output will be 100 MW AC), capable of generating at least 215 Million Units (MU) of electricity by the end of the first 12 months from the date on which it achieves COD and subject to plant stabilization. Table below highlights the details for the subject plant: Particular Detail Capacity (MW) (A) 130 MW DC (100 MW AC) Plant Load Factor (%) (B) 18.88%
SUMMARY VALUATION REPORT 251 252
Annexures
Key Assumptions and Value Summary – September’20 EMBASSY OFFICEPARKS MANAGEMENT SERVICES PRIVATE LIMITED|EMBASSY OFFICEPARKS REIT
Leasable Area (msf)/ Keys/ MW Discount Rate GAV as of Sep’20 (Rs mm) Cap Rate/ Rent/ Proposed/ Proposed/ Asset Completed Total Completed U/C EBITDA ADR/Tariff Completed Total U/C U/C Multiple Rate Commercial Assets SUMMARY VALUATION REPORT Embassy Manyata 11.8 3.1 14.8 12.03% 13.00% 8.00% 91 135,267 21,172 156,439 Embassy GolfLinks* 2.7 0.0 2.7 12.03% NA 8.00% 148 27,428 - 27,428 Embassy One 0.3 0.0 0.3 12.03% NA 7.50% 147^ 4,532 - 4,532 Express Towers 0.5 0.0 0.5 12.03% NA 7.50% 270 17,722 - 17,722 Embassy 247 1.2 0.0 1.2 12.03% NA 8.00% 110^ 16,404 - 16,404 FIFC 0.4 0.0 0.4 12.03% NA 7.75% 285 13,908 - 13,908 Embassy TechZone 2.2 3.3 5.5 12.03% 13.00% 8.25% 48 15,096 6,511 21,607 Embassy Quadron 1.9 0.0 1.9 12.03% NA 8.25% 48 13,104 - 13,104 Embassy Qubix 1.5 0.0 1.5 12.03% NA 8.25% 48 10,153 - 10,153 Embassy Oxygen 2.5 0.7 3.3 12.03% 13.00% 8.25% 54 19,217 2,025 21,242 Embassy Galaxy 1.4 0.0 1.4 12.03% NA 8.25% 45 8,783 - 8,783 Sub-Total (Commercial Offices) 26.2 7.1 33.3 281,614 29,708 311,322 Hospitality Asset Hilton at Embassy GolfLinks 247 Keys - 247 Keys 12.63% NA 14x 9,000 4,375 - 4,375 Four Seasons at Embassy One 230 Keys - 230 Keys 12.63% NA 14x 10,500 7,545 - 7,545 Hilton at Embassy Manyata (5 Star) - 266 Keys 266 Keys NA 13.60% 14x 8,000 - 2,563 2,563 Hilton at Embassy Manyata (3 Star) - 353 Keys 353 Keys NA 13.60% 14x 5,500 - 1,559 1,559 Sub-Total (Hospitality) 477 Keys 619 Keys 1096 Keys 11,920 4,122 16,042 Others Embassy Energy 100MW - 100MW 13.50% NA NA 8.76 10,002 - 10,002 Sub-Total (Others) 100MW - 100MW 10,002 - 10,002 26.2 msf/477 7.1 msf/619 33.3 msf/1096 Total 303,536 33,830 337,366 Keys/100MW Keys Keys/100MW % Split 90% 10% 100% *Indicative of Embassy REIT’s economic interest in the asset, viz. 50%; ^ Inclusive of car park rent Key Assumptions and Value Summary – March’20
Leasable Area (msf)/ Keys/ MW Discount Rate GAV as of Mar’20 (Rs mm) EMBASSY OFFICEPARKS MANAGEMENT SERVICES PRIVATE LIMITED|EMBASSY OFFICEPARKS REIT Cap Rate/ Rent/ Proposed/ Proposed/ Asset Completed Total Completed U/C EBITDA ADR/Tariff Completed Total U/C U/C Multiple Rate Commercial Assets Embassy Manyata 11.8 3.1 14.8 12.03% 13.00% 8.00% 90 129,952 20,154 150,106 Embassy GolfLinks* 2.7 0.0 2.7 12.03% NA 8.00% 148 27,014 - 27,014 Embassy One 0.3 0.0 0.3 12.03% NA 7.50% 147^ 4,897 - 4,897 Express Towers 0.5 0.0 0.5 12.03% NA 7.50% 270 17,866 - 17,866 Embassy 247 1.2 0.0 1.2 12.03% NA 8.00% 110^ 16,624 - 16,624 FIFC 0.4 0.0 0.4 12.03% NA 7.75% 285 13,911 - 13,911 SUMMARY VALUATION REPORT Embassy TechZone 2.2 3.3 5.5 12.03% 13.00% 8.25% 48 14,929 6,103 21,032 Embassy Quadron 1.9 0.0 1.9 12.03% NA 8.25% 48 13,838 - 13,838 Embassy Qubix 1.5 0.0 1.5 12.03% NA 8.25% 48 10,085 - 10,085 Embassy Oxygen 2.5 0.7 3.3 12.03% 13.00% 8.25% 54 19,492 1,924 21,416 Embassy Galaxy 1.4 0.0 1.4 12.03% NA 8.25% 45 8,696 - 8,696 Sub-Total (Commercial Offices) 26.2 7.1 33.3 277,304 28,181 305,485 Hospitality Asset Hilton at Embassy GolfLinks 247 Keys - 247 Keys 12.63% NA 14x 9,000 4,436 - 4,436 Four Seasons at Embassy One 230 Keys - 230 Keys 12.63% NA 14x 10,500 7,673 - 7,673 Hilton at Embassy Manyata (5 Star) - 266 Keys 266 Keys NA 13.60% 14x 8,000 - 2,378 2,378 Hilton at Embassy Manyata (3 Star) - 353 Keys 353 Keys NA 13.60% 14x 5,500 - 1,422 1,422 Sub-Total (Hospitality) 477 Keys 619 Keys 1096 Keys 12,109 3,800 15,909 Others Embassy Energy 100MW - 100MW 13.50% NA NA 8.76 10,289 - 10,289 Sub-Total (Others) 100MW - 100MW 10,289 - 10,289 26.2 msf/477 7.1 msf/619 33.3 msf/1096 Total 299,702 31,981 331,683 Keys/100MW Keys Keys/100MW % Split 90% 10% 100% *Indicative of Embassy REIT’s economic interest in the asset, viz. 50%; ^ Inclusive of car park rent 253 Principal Place of Business
Royal Oaks Embassy GolfLinks Business Park Off Intermediate Ring Road, Bengaluru 560 071. Karnataka, India Tel: +91 80 3322 0000 Fax: +91 80 4903 0046